Budapest Business Journal 2811

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BUSINESS JOURNAL BUDAPEST

VOL. 28. NUMBER 11

JUNE 5 – JUNE 18, 2020

SPECIAL REPORT Legal

SPECIAL REPORT

Legal Market Talk: A Digital Reset?

The coronavirus pandemic dominated our annual legal roundtable. How has it affected the profession, what changes has it prompted, and what are the current and future implications a world that is very much not “business as usual”?  10 NEWS

Investment Volume Falls for 1st Time in Years The main reason for the decline in investment volume in the first quarter of the year is, surprisingly, not the oft-blamed coronavirus pandemic, but the decrease in utilization of EU funds. 3 SOCIALITE

The Future of Budapest’s Restaurants David Holzer finds his mind, not to mention his stomach, pining for the forbidden fruits of a Budapest restaurant, and wondering what the hospitality scene in the capital will look like post-pandemic. 28

Growing out of Adversity

INE BUS

SS

Expat CEO of the Year runner-up Charles Wassen says his Dana Hungary team have proved themselves in many ways this year, fighting the challenges thrown up by the COVID-19 pandemic.  6

Integrated Advisory Solutions Legal | Tax | Business Advisory

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Budapest Business Journal | June 5 – June 18, 2020

THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL CONTRIBUTORS: Zsófia Czifra, Kester Eddy,

Bence Gaál, Gergely Herpai, David Holzer, Christian Keszthelyi, Gary J. Morrell, Nicholas Pongratz, Ekaterina Sidorina, Robert Smyth, Zsófia Végh.

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OF LEGAL POWERS AND HOSPITALITY It is apt, though entirely coincidental, that our annual overview of the Hungarian legal market comes at a time when law and order has become internationally topical, not to say highly contentious, thanks to what is going on in the United States.

I do not intend to make any comment on that; we do not cover U.S. affairs, and the video footage, both of the death of George Floyd on May 25, and the subsequent riots and national protests, speak volumes on their own.

In any case, it is not as if we do not have legal controversies of our own to focus on, not least Hungary’s government by decree emergency powers. As we report inside, these are due to come to an end on June 20, assuming Parliament agrees to it. The very passing of the law raised international hackles (and a fair few domestically), although Fidesz, most notably through Minister of Justice Judit Varga and the government’s combative international spokesman Zoltán Kovács, was always ready to fight its corner.

The political genius of Viktor Orbán is that he understands the mindset of the Hungarian voter far better than perhaps any previous politician. (One important caveat to that from the last general election is that his Fidesz party may be losing the younger generation.

Whether it can recover from that, or whether the numbers will become substantial enough to make a difference, only time will tell.)

The government argued that Parliament ceded those powers, and always had the possibility of taking them back. That is undeniably true, although you don’t have to be much of a cynic to note that Fidesz has a two-thirds majority in Parliament and is one of the most disciplined parties to ever play the political game.

Still, the prime minister knows his handling of the pandemic will be judged by local votes, not international commentators. The opposition parties may have hoped Orbán had overreached in taking such strong powers, but the fact that they are being given back robs that argument of most of its potency.

Be that as it may, the next general election is not due until spring 2022. If a week is a long time in politics, 20 months sounds like an eternity.

The leading law firms have other concerns, of course.

The regional and international players largely serve national and multinational businesses. Put bluntly, for them to prosper, so must the economy. Labor law has been a busy area, as has advising on the many government schemes rushed into action. But the legal market will be waiting for the economy to pick up just as much as the commercial world.

One other area of focus in this issue is hospitality.

Tourism is a huge contributor to Hungary’s GDP, but this is not a passing phase; the country’s traditions in this area go back to the turn of the 19th century into the 20th, and again in the inter-war years, where Budapest boomed and became part of the Grand Tour.

We will revisit this sector in a later issue, but here we talk with three of the leading hotel general managers, and a leading restaurateur, about how they have coped with the lockdown, and their hopes and aspirations for the future. It makes for fascinating reading, but the take away bullet point is clear: Roll on 2021.

Keep safe.

Robin Marshall Editor-in-chief

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Budapest Business Journal | June 5 – June 18, 2020

News///macroscope

Investment Volume Falls After Years of Expansion

ZSÓFIA CZIFRA

The long-lasting expansion of investment broke in the first quarter of 2020: the extent of the decline was 1.8%, according to data released by the Central Statistical Office (KSH).

In absolute terms, investments came to HUF 1.796 trillion (EUR 5.1 billion) during the period.

The seasonally adjusted volume of investments decreased by 1.1% compared to the previous quarter. Within it, the seasonally adjusted volume of construction investments grew by 0.2%, while investments in machinery and equipment decreased by 2.2%.

Year-on-year, the volume of investment activity decreased by 1.8%. Within this, construction investments representing

approximately

55%

of the total volume of investments rose by 2.8% and investments in machinery and equipment, representing 43% of the total value, decreased by 7%. This represents the most unfavorable change of all three indicators in the past three years, KSH noted.

General Decrease

Investment performance in the case of enterprises employing at least 50 people and realizing 58% of investments increased at a rate below the average growth of the previous quarters, by 4%. In this trend, high volume completed green field investments conducted by foreign owned enterprises played a role.

to a small extent this year, Takarékbank analyst Gergely Suppan said in a note. As for the full year, the analyst expects a

3-5% decrease

Greece* Spain Latvia Cyprus France Lithuania Croatia Sweden Luxembourg Eurozone Slovakia EU27 Finland Italy Portugal Bulgaria Belgium Ireland Estonia** Austria Romania Denmark Slovenia Malta Hungary** Germany Netherlands Poland Czech Republic

The main reason for the decline in investment volume in the first quarter of the year is not the oft-blamed coronavirus pandemic, but the decrease in utilization of EU funds. The fallback on a yearly basis was somewhat of a surprise for analysts, and the effects of the pandemic are yet to be seen in the next quarter.

Unemployment in EU Member States (April 2020)

* February 2020 data **March 2020 data

At the same time, in the case of budgetary units, realizing 10% of investments, developments were down by

17%

compared

to the base period, partially as a result of the smaller volume of implemented EU-financed projects in the current quarter.

Despite of the general decrease in investments, developments in manufacturing, representing the largest weight, carrying more than three-tenths of investments, slightly increased (1.1%), in spite of the significant decrease in the great weight representing manufacture of transport equipment.

Due to ongoing large-scale projects, investments significantly increased in the manufacture of electrical equipment, in the equally important manufacture of rubber and plastic products and in the manufacture of chemicals and chemical products.

Real estate investment volume, representing close to one-fifth of total investments, grew outstandingly, by 10%; within this, dwelling constructions increased even more significantly. Developments also grew significantly in several smaller weight representing sections.

The highest growth characterized investments in agriculture, forestry and fishing (31%), partially as a result of fodder mixer machines and breeding stock acquisitions. The second largest growth was registered in the field of information and communication (28%).

Not Only the Virus to Blame In the previous quarter, investment volume grew by 5.9% on a year-on-year basis, which was the lowest rate since

Source:

the end of 2016. However, the preceding quarters still saw more robust growth: the KSH registered 15%, 19% and 26% annual expansion in the third, second and first quarter of 2019, respectively.

Investment volume has been steadily growing since the first quarter of 2017; however, early signs of a possible slowdown were there in the past year. Business site portfolio.hu says that investments started to lose momentum a year ago and, albeit the coronavirus pandemic contributed to the process in the past few months, the main reason is the decrease in the utilization of EU funds which caused a setback in largescale state projects.

Due to the pandemic and the high base of the past years, investments might fall back ADVERTISEMENT

in investments, although the investment rate that reached 28.3% last year might remain at a similar level, he added.

In the meantime, the second estimates of first quarter GDP data confirm that the Hungarian economy so far performed better than its peers amidst the coronavirus pandemic.

The volume of gross domestic product was 2.2% higher in Hungary in the first quarter of 2020 than in the corresponding period of the previous year, the second reading of the figures confirms the first estimates.

The extraordinary situation resulting from the coronavirus pandemic had a negative impact on the performance of most sections, but market services and, to a lesser extent, industry continued to be the driving forces for growth in the first quarter as a whole.

Hungary’s economy will recover from the fallout from the coronavirus pandemic faster than previously expected, Prime Minister Viktor Orbán told public radio a week ago.

“I think that we will return to previous levels of economic output much faster than we had expected earlier,” he said.

Numbers to Watch in the Coming Weeks KSH publishes April industry data today (Friday, June 5): analysts expect a further decline following a 5.6% decrease in March, due to the impact of the lockdown.

On June 9, May consumer prices will be out, followed by the April performance in the construction sector on June 15.

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Budapest Business Journal | June 5 – June 18, 2020

Futureal Starts Construction of Corvin Innovation Campus Futureal Group has launched construction of the Corvin Innovation Campus, its latest office project at Corvin Promenade. The complex, equipped with contactless technology, will offer around 30,000 sqm of space.

Corvin Innovation Campus by Futureal.

GARY J. MORRELL

Developers are reporting that office projects are going ahead despite the perceived difficulties of constructing and developing in line with predetermined time schedules in the COVID-19 emergency. Atenor, for example, has also recently announced the completion of Building “A” at Aréna Business Campus, which has received the occupancy permit. The handover of the 21,000 sqm office building has met the deadline of the original schedule according to Atenor.

Corvin Innovation Campus is located in the south of the Corvin Quarter urban regeneration project, and Futureal have been seeking

ways of extending the office component of the development. The first phase of the complex will provide 15,800 sqm and is expected to be handed over in the fall of 2022, while the second, 13,800 sqm phase will

consist of

13,800 sqm.

The complex will be surrounded by green public space and widened roads as part of the development.

“Corvin Innovation Campus has been designed to meet the tenants’ requirements, shaped by the current global health issue.

It has been developed and will be operated according to the BREEAM ‘Excellent’ and WELL ‘Platinum’ certification system to

ensure it has a positive impact on the wellbeing and health of the people that work there,” says Futureal.

The developer is committed to developing its office projects to the WELL standard in addition to BREEAM. The WELL system was introduced in order to improve office interiors and thus the health and wellbeing of staff, as well as productivity. Elements related to combatting the coronavirus are now being incorporated into the system.

Stay Safe

The building, designed by Radius B+S architectural studio, is being developed under Futureal’s “Stay Safe” initiative,

designed to respond to changing market demand due to the epidemic.

Based on WELL’s strict health standards and experience, the program Futureal is introducing adds new internal security standards and additional technological solutions. As part of the Stay Safe initiative, common areas at Corvin Innovation Campus will become almost completely contactless and automatic doors and light switches with card sensors, as well as safe distance signs will be set in the building. The elevators can be controlled with a mobile app and toilets will also be equipped with contactless rinsing, hand washing and soap dispensers.

The office complex is located in a green area and from the main lobby there is a direct access to a

3,000 sqm inner garden

functioning as a social space for employees.

Further, an increased number of bicycle storage spaces as well as shower and locker facilities will also be available. As is now the expectation in the Budapest office market, the project provides direct access to service and leisure amenities in addition to direct road and public transport connections.

The Corvin Promenade urban regeneration project has won the European Commercial Property Award for the Best Mixeduse Development of Europe and FIABCI Hungary Real Estate Development Award.

In 2014, the project received the Urban Land Institute’s Global Award for Excellence.

BBJ’s Business Lunch Recommendations P O W E R E D B Y F I N E R E S TA U R A N T S 2 0 2 0

Costes Downtown

Porcellino Grasso

Address: 1051 Budapest, Vigyázó Ferenc u. 5. • Phone: +36 20 926 7837 • E-mail: reservations@costesdowntown. hu • Web: costesdowntown.hu • Opening hours: 6:30 - 23:00

Address: 1024 Budapest, Ady Endre u. 19. • Phone: +36 1 886 7881 • E-mail: porcellino@porcellino.hu • Web: www. porcellino.hu • Opening hours: Monday to Sunday 12AM to 11PM

Spíler Buda Address: 1123 Budapest, Alkotás u. 53. (MOM Park) • Phone: +36 1 800 9218 • E-mail: hello@spilerbuda.hu • Web: www.spilerbuda.hu • Opening hours: 11:30 - 23:30

Spíler Original Address: 1075 Budapest, Király u. 13. Gozsdu udvar • Phone: +36 1 878 1320 • E-mail: hello@spilerbp.hu • Web: www.spilerbp.hu • Opening hours: 17:00 - 02:00

Jamie Oliver’s Italian

Caviar&Bull Budapest A Maltese export with an unmistakeable Hungarian twist.

Local fresh ingredients, sourced from the best suppliers harmoniously mixed with Caviar&Bull signature dishes and key staples of Hungarian cuisine such as the use of the local grey cattle, Mangalica pig, Foie gras, paprika, and Tokaj wine.

Address: 1073 Budapest, Erzsébet krt.

43-49. • Phone: +36 30 832 3232 • E-mail: budapest@caviarandbull.com • Web: caviarandbull.hu • Opening hours: 12.00-22.00 (all day)

Address: 1014 Budapest, Szentháromság u. 9-11. • E-mail: hello@jamiesitalian.hu • Web: www.jamiesitalian.hu • Opening hours: 11:30 - 23:30

Jardinette Kertvendéglő Address: 1112 Budapest, Németvölgyi út 136. • Phone: +36 1 248 1652 • E-mail: info@jardinette.hu • Web: www.jardinette.hu • Opening hours: Tuesday - Sunday 12:00-23:00

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Budapest Business Journal | June 5 – June 18, 2020

News | 5

Coronavirus ///roundup Economy Reopening as Epidemic Comes to an End The coronavirus epidemic is clearly coming to an end in Hungary, Chief Medical Officer Cecília Müller said at the online press conference of the Operational Council on June 2. Müller said that the analysis of the weekly epidemiological data showed the number of new cases had declined for the 10th consecutive day.

NICHOLAS PONGRATZ

Despite the rosy appraisal of the current standings, analysts surveyed from banks Erste and CIB warn the economic downturn may be at its most severe in the second quarter. Indeed, the economic impact of the epidemic is becoming increasingly clear.

About 73,000 people lost their jobs in April, 54,000 of whom became economically inactive and 19,000 unemployed, according to the Central Statistical Office (KSH); 5,254 of the total were made redundant in group layoffs according to the National Employment Service (NFSZ).

In the previous month, when the stay at home restrictions were introduced,

1,098 people

were laid off in this way, compared with 363 in February. In previous years, the average monthly data only fluctuated around 300-400.

According to a 15,000-participant survey from BÁV Zálog, 80% have a job, but due to the epidemic, 5% are on unpaid leave, 30% are employed on reduced hours, and 35% work the same number of hours for reduced wages. Some 60% of respondents expect their revenue to decline in the near future, of which 38% expect a small decline, while 22% expect something more severe.

Recent data from Bisnode suggests that the number and value of invoices issued by domestic companies fell sharply in the first quarter of this year compared to the same period last year.

Crisis or Opportunity?

Elsewhere, half of Hungarian SMEs said they were moderately affected by the coronavirus, while 44% were heavily affected, according to a survey conducted among K&H’s customers in mid-April.

More than 60% of them have introduced austerity measures to mitigate the damage, and a third of companies have enough financial reserves for just a month or two. However, according to another

survey from Stylers, 50% of domestic companies are not affected at all or only slightly by the crisis, and a fifth look at it specifically as an opportunity.

Even as the situation alleviates, companies are still doing what they can to support the healthcare system. IKEA Hungary donated furniture to departments of Szt. János Hospital that were declared epidemic centers and the Department of Internal Medicine and Hematology at Semmelweis University, in addition to donating toys to the Pál Heim National Institute of Pediatrics, Bethesda Children’s Hospital and the Clinic of Anesthesiology and Intensive Care at Semmelweis University, according to Forbes.hu.

To support the daily lives of ambulance staff and their families, Auchan handed over 10 million trust points, worth HUF 5 million, to the National Ambulance Service (OMSZ), who were also supported in their supply of oxygen for their vehicles

by Linde Gáz Magyarország Zrt. Indotek Group, meanwhile, has launched a campaign in which it will distribute nearly

1st District

1st District

2nD District

48 sqm – 2 rooms, Logodi street

288 sqm – 5 rooms, Corvin sqUare

69 sqm – 3 rooms, Ürömi street

A few minutes’ walk from the Buda Castle and the Vérmező Park, this renovated apartment has private gas heating and it is situated on the first floor of a condominium in good condition.

At the bottom of the Castle Hill, in one of the historical areas of Budapest, this baroque style villa house built in the 18th century has 380 sqm of lot and many make over possibilities.

Near Kolosy Square, this completely renovated, well divided, top floor apartment has fully fitted open kitchen and air conditioning system. It is situated within a small condominium.

43.900.000 HUF

390.000.000 HUF

55.900.000 HUF

+36.1.336.1706

2nD District

+36.70.365.0827

2nD District

+36.1.336.1706

3rD District

192 sqm – 6 rooms, BaLogH ádám str.

279 sqm – 5 rooms, nyék

75 sqm – 3 rooms, ÓBUda

In a diplomatic area, this completely renovated, top floor, luxury, duplex apartment has beautiful panorama from the 95 sqm of rooftop terrace, and a 40 sqm of 2 car garage in the courtyard.

This four-storey detached house in good condition has 1050 sqm of lot, 2 big terraces, 2 garages and a lot of storage places. It is located in a green and quiet area.

Close to the Kolosy Square, this sunny, high floor apartment benefits of a beautiful panorama over the Buda Hills and 2 balconies. It is situated within a small condominium with elevator.

199.000.000 HUF

209.000.000 HUF

46.900.000 HUF

+36.70.376.4138

3rD District

+36.70.376.4138

3rD District

+36.70.328.8501

5th District

148 sqm – 4 rooms, testvérHegy

340 sqm – 9 rooms, táBorHegy

67 sqm – 3 rooms, BaLaton street

This two-storey detached house, that needs renovation, has beautiful panoramic view, two terraces, 1025 sqm of lot, well-kept garden and a two-car garage.

In a quiet and green area, this two-storey semidetached house has 500 sqm of lot, 2 bathrooms, 3 balconies, a terrace, well-kept garden and garage.

This completely renovated, street facing apartment benefits of a huge living room with open kitchen and two separate bedrooms. It is situated in a condominium with nice courtyard.

109.900.000 HUF

129.900.000 HUF

72.000.000 HUF

+36.70.328.8501

5th District

+36.70.328.8501

5th District

+36.30.886.1014

6th District

140 sqm – 4 rooms, BaLaton street

113 sqm – 4 rooms, sas street

78 sqm – 2 rooms, szív street

This completely renovated, very bright, well divided, high floor, luxury apartment has 2 bathrooms and a 14 sqm of balcony with a view over the Danube.

New built, luxury apartments for sale with huge terraces and fascinating view over the St. Stephen’s Basilica, in the centre of the city.

This street facing apartment benefits of high ceiling (410 sm) and balcony. It is located near Andrássy Boulevard, within a completely renovated period building with elevator.

174.900.000 HUF

195.000.000 HUF

55.200.000 HUF

+36.30.886.1014

+36.30.886.1014

+36.1.351.0446

50,000 masks

at the 17 malls it has reopened nationwide.

With recovery in sight, the government made a significant effort to boost domestic tourism, it being one of the primary sectors affected by the downturn.

A combined HUF 150 billion of funding through various programs is being provided to support investments in the tourism sector, the head of the Hungarian Tourism Agency (MTÜ) Zoltán Guller told state news agency MTI. Hunguest Hotels has already received a total of HUF 17 bln from the fund with which it will develop 14 hotels. Private accommodation establishments in Hévíz (190 km southwest of Budapest) could receive a total of about HUF 1.3 bln.

Apart from mere support, this investment is well-founded as Hungarian holiday makers are much more likely to travel to domestic destinations than spend time on a beach in other countries this year, according to a Lounge Group survey commissioned by the MTÜ.

7th District

7th District

13th District

94 sqm – 3 rooms, BetHLen gáBor str.

150 sqm – 4 rooms, damjaniCH street

65 sqm – 2 rooms, HoLLán ernő street

Breathtaking view over the Buda Hills, this luxury apartment has been entirely renovated with exquisite taste, benefits of separate, bright rooms and a balcony.

Close to the City Park, within a beautiful period building with elevator, this very spacious, street facing apartment in good condition benefits of 4 separate rooms, 2 bathrooms and balcony.

This completely renovated, street facing apartment has 2 balconies and it can be converted to a 3 room property as well. It is located close to the Danube and the St. Stephen’s Park.

89.900.000 HUF

105.000.000 HUF

64.000.000 HUF

+36.1.351.0446

13th District

+36.1.351.0446

13th District

+36.70.414.7759

nagykovácsi

107 sqm – 4 rooms, Hegedűs gyULa str.

77 sqm – 2 rooms, Pozsonyi street

230 sqm – 6 rooms, nagykováCsi

This completely renovated, very bright, west facing apartment is divided to 2 separate apartments (86 sqm + 21 sqm) at the moment, but the 2 properties can be united.

This completely renovated, high floor, luxury apartment has a living room with open kitchen and 2 bedrooms. It is located close to the Danube and the St. Stephen’s Park

In Pest County, close to the American School, this new built detached house designed with high-quality materials and has 810 sqm of lot.

Price includes the built-in kitchen.

74.900.000 HUF

104.900.000 HUF

149.800.000 HUF

+36.70.414.7759

+36.70.414.7759

+36.70.376.4138

grUPPo t.F.m. kFt. 1068 BUdaPest, kiráLy U. 102. each agency independently owned and operated. • these offers are valid, till the apartments are sold. • these information do not constitute a contractual element.

2020_06_tecnocasa_bbj.indd 1

2020. 06. 02. 14:42

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Budapest Business Journal | June 5 – June 18, 2020

Business

Sowing Seeds of Success in Times of Adversity

For multi-lingual leader Charles Wassen, finishing as a runner-up in the BBJ Expat CEO of the Year awards in January was very much recognition of the success of his team.

Those same colleagues have proved themselves again in many different ways since, fighting the challenges thrown up by the COVID-19 pandemic.

ROBIN MARSHALL

“For sure, I play my part, but, very frankly, I think it is more recognition of the whole,” says Wassen, reflecting back on January’s gala.

The world has changed since then, of course, courtesy of coronavirus, but between those two points there was still time for Dana Hungary to win a Top Employer Hungary

2020 award,

one of the first in its hometown of Győr to be won outright, rather than inherited from a parent company.

Dana has four units in Győr; all have been affected but the economic shutdown, though to varying degrees.

“All were closed at some point, though our aftermarket distribution center was running more or less continuously,” Wassen says. “The three others alternated between being open and closed.”

Something Wassen has pioneered in Hungary in his six years in charge is a “One Dana” philosophy. “We are able to share resources between the plants, moving them within the campus. I think it is one of our strengths, this common approach. We have four plants but one team, and we can work on the common answers demanded by this type of situation.”

The approach is pragmatic, if nothing else. If there is a temporary shortage of staff at one plant, colleagues can be moved from another that is less busy. Its successful implementation has won the

The company has extremely good relations with Széchenyi István University, and works hard at maintaining that; Wassen makes sure he attends career days there, and he personally welcomes students when they come on open days.

“I want them to see that the management is engaged with them, interested in them,” he explains. Wassen says Dana has a good reputation in the region, and he suspects it also benefits from the novelty factor of having an American multinational background; most of the large engineering companies in Győr are German. “You can never have too many good people, of course, but we don’t have any problems attracting the talents we want.”

Once you have them, you need to develop them. Wassen says his philosophy is built on trust, respect and safety. “The A different world. Charles Wassen receives his BBJ biggest reward is to see how the team you Expat CEO of the Year runner-up certificate from editor- have helped put together works and grows in-chief Robin Marshall. Photo by Marianna Sárközy. and develops.”

That is not to say there aren’t some elements he would change. He considers the quality of the workforce. “There were Hungarian operation recognition from the himself half French and half Dutch and very high-level schools and universities, company’s international management. speaks French, Dutch, English, German and the people in this region were and Slovak, and is trying to come to terms Flexible Measures extremely strong in engineering, with with Hungarian (like many expats, he says But even while employing flexible measures good technical knowledge, creativity and his passive is much better than his ability such as these, Wassen says there is no skill levels,” Wassen says. to speak it). denying the difficult environment. “We Initially, there was a lot of support from He believes that students would benefit have measured at least a 25% loss, which we Italy, Germany and France, but that baton from deeper foreign language learning had to prove to receive a significant cash has now been passed on, the CEO says, with earlier, for example. He also thinks subsidy from the government to support Hungarian staff helping with training and Hungarians, for all their strengths, reinvestment,” he explains. knowledge transfer in other countries, and would also benefit from being less closed To be precise, Dana has committed to an even taking up expat positions themselves. in their mentality. investment of HUF 428 million (EUR 1.2 The fact that the decision was taken to “The future of Hungary should be much mln), which has attracted non-refundable place a fourth plant in Hungary in 2016 is more internationally open.” Individuals government funding of HUF 214 mln (EUR both a reflection on the past and present would benefit, but so would companies, 600,000). work and an investment in the future. “It from SMEs upwards, he says.

“This cash subsidy for Capex investments will be a world benchmark in terms of What is next for Dana in Hungary? The [….] ensures we are able to continue our manufacturing gears,” says Wassen. “It future clearly lies in Industry investment plans. It means we would is not the equipment, you can put that like to move on with our developments, anywhere; it is having the engineers, the focusing on Industry 4.0, automation technicians, the highly skilled operators to and electrification, but more generally, and work safety processes. The subsidy work the machines that matters.”

Wassen believes the seeds for success are requires we sustain the current level of Suitable Candidates being sown now. workforce and it surely helps to be able For the past couple of years, until the “Yes, this is a difficult period, but it is to further develop the competency of our pandemic put a halt to so many things, the same for everyone. We need to limit qualified engineers,” Wassen says including falling unemployment figures, one the costs, work together, be ready. My The CEO praises the government’s focus hope is for Győr, for the country to be on trying to preserve jobs and maintain the of the most commonly expressed concerns of businesses in Hungary has been finding among the first out of the blocks. A lot economy, as well as protecting the general suitable candidates. But Wassen says that of companies will be slow to react, and public. “Dana is significantly reducing has not, to date been a problem for Dana. that is a wonderful opportunity for us. its spending in the region. In Hungary, “It may sound arrogant, but in the end, We have to show we are ready to accept because we were able to receive this cash you have the people you deserve,” he says. those opportunities.” subsidy upfront, we were able to even expand some new investments.”

The company hasn’t just been receiving in recent weeks, however. A Dana Hungary Kft. is an automotive transmissions and axles for the offcombination of funding put aside by Dana highway industry segment, coolers, and off-highway vehicle parts Hungary’s management team and private heat exchangers and gear sets for manufacturer headquartered in contributions from staff raised

4.0

more than

HUF 1,500,000,

which went to the regional hospital in the form of masks, household appliances and IT equipment support.

Dana first came to Hungary 15 years ago drawn by cheaper labor, yes, but also by

Győr, 120 km west of Budapest.

Part of the American group Dana Incorporated (which has its world HQ at Maumee, Ohio), Dana Hungary will celebrate its 15th anniversary in Hungary this year.

Its main activities are producing

the automotive industry. It also operates its European aftermarket distribution center from Győr. Its most recent investment in Hungary was a USD 71 million, 24,000 sqm greenfield facility manufacturing state-of-the-art gears.

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Budapest Business Journal | June 5 – June 18, 2020

Corporate Debt Market During COVID-19 Pandemic We are in the midst of a global coronavirus pandemic, with worldwide GDP contracting substantially, creating a phenomenon of corporations issuing record amounts of new indebtedness. Les Nemethy and Sergey Glekov examine activity on corporate bond and loan markets, as well as the motivation for borrowers to take on new indebtedness.

Central bank stimulus has made the corporate bond market an attractive fundraising tool for companies. The U.S. Federal Reserve as well as the European Central Bank (through its Pandemic Emergency Purchase Program) have included corporate bonds in their asset purchase schemes, helping to drive down yields, making corporate debt cheaper than ever.

In the United States, investment graderated firms issued USD 261.8 billion of new bonds in April 2020 alone, almost three times higher than in April 2019, according to the Securities Industry and Financial Markets Association.

The Fed programs were expanded on April 9 to include certain junk bonds. As a result, the junk bond market also saw a flood of new issuance in April, for example Yum Brands, owner of KFC and Pizza Hut, and cinema operators AMC, companies struggling to maintain liquidity due to a collapse in revenues.

The data from Europe mirrors the situation in the United States: European investment grade-rated companies raised USD 83.2 bln in April 2020, reaching levels not seen since 2009, according to newswire Reuters.

The Corporate Finance Column

Corporate Debt Market During COVID-19 Pandemic 300 250

U.S. Corporate Bond Issuance (USD billion)

Investment Grade High-Yield

200 150 100 50 0

Source: Securities Industry and Financial Markets Association

Corporate Loan Markets

U.S. corporate lending (commercial and industrial loans) skyrocketed in March and April of 2020.

Corporate loans typically increase when the economy is thriving. The current surge is due to companies striving to maintain liquidity due to the COVID-19 outbreak.

Similarly, data from Europe shows that volumes of new euro-denominated revolving loans and overdraft facilities to non-financial corporations increased substantially in March.

The current surge in corporate lending in the euro area is also supported by very low interest rates on new euro-denominated loans (revolving loans and overdrafts) to euro area non-financial corporations, lending rates of approximately 2% in March 2020.

In many countries, banks have been encouraged to loosen their lending criteria via government guarantee programs, helping to inject liquidity into the economy. The government of Italy, for example, has offered a EUR 500 bln guarantee program (including guarantees via SACE Simest – the Italian export credit agency) to banks, thereby de-risking lending activity to banks.

Moreover, the rejection rate by banks for loans to euro area enterprises continued to increase, according to the euro area bank lending survey, First quarter of 2020 It is interesting to note that in the Visegrád Four countries, lending has been much more subdued, although it is worth noting that the statistics are available only until March; perhaps April will show more

Euro Loans and Overdrafts Volumes of new euro-denominated revolving loans and overdraft to euro area non-financial corporations (EUR billions) 570 560 550

Business | 7

of an increase. It is also possible that the depreciation of Central European currencies is a reason there was little if any growth in euro-denominated amounts for the region.

Motivation for Borrowers

From our exposure to debt markets, we see a number of motivations for new indebtedness. First, there are the “losers” from the coronavirus, such as the tourism and automotive industries, which have seen

a dramatic decline in revenues, face ongoing future uncertainty, and need to create cash or credit reserves to weather the storm.

Second, there are also a few “winners” from the coronavirus, such as certain online retailers, pharmaceutical companies, etc., which need capital to fund expansion.

A third motivation is simply to lock into interest rates that are incredibly cheap by historic standards.

The “take home” message for any owner of a company reading this article is that now is a good time to raise debt. Interest rates are low, and liquidity helps reduce risk in these highly uncertain times, and allows companies to take advantage of opportunities in this coronavirus environment, especially if the coronavirus triggers a prolonged recession.

Les Nemethy is CEO of EuroPhoenix (www.europhoenix. com), a Central European corporate finance firm, author of Business Exit Planning (www. businessexitplanningbook.com) and a former president of the American Chamber of Commerce in Hungary.

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Hotel Market Talk: Surviving Coronavirus We know the hospitality sector has been hard hit by the COVID19 pandemic, but how bad is it? The Budapest Business Journal organized a roundtable with three of the leading hoteliers in Budapest, Jonathan Pace of Corinthia Hotel Budapest, Stephan Interthal of Kempinski Hotel Corvinus Budapest, and Arne Klehn of the Marriott International brands, to get a fuller picture.

BBJ: Have you had to furlough or lay off staff?

JP: We have so far managed to retain our colleagues, partly thanks to the government assistance, but also through the unwavering commitment of our company, which has put the wellbeing of our family of colleagues at the forefront of every decision we had to take. We are sad that this pandemic has brought so much hardship on so many families; however, we will weather this, and stick together to rebuild the business and our lives SI: We laid off only 10 employees at the end of their trial period. We also had a few temporary contracts that have not been renewed. More importantly, we confirmed all labor contracts of our remaining 255 staff members.

AK: Changes in the taxation helped us a lot, we introduced temporary employment contracts with decreased salaries for all employees including the executive committee, plus, we have applied for the government aid also.

Until today, we have been able to secure almost all jobs for our associates.

BBJ: Do you have any insight as to when you will be able to welcome foreign guests again?

JP: We are monitoring the government’s easing of restrictions daily, and we are waiting to see the effects brought by the reopening of the borders. Once we feel confidence in travel starts to resume, we will be here, eagerly waiting for our guests to enjoy our hospitality once again.

SI: We hope that in the third quarter, July and August, we can achieve a 20% room occupancy. From September to the end of the year, some business and tourism travelers may come back slowly.

ROBIN MARSHALL

BBJ: What has been the impact of the pandemic on your business in Budapest?

Jonathan Pace: Regretfully, the impact has been devastating. We were gearing up for the conference season when, all of a sudden, we ended up without guests, all in a couple of days. The hotel remained open, albeit with little movement Stephan Interthal: From approximately February 21, the international meetings and travel activities collapsed. Then everything happened quickly: on March 4 the first coronavirus cases were confirmed in Hungary; on March 11, the state of emergency status was declared; and on March 16 the borders were closed. During this period our entire business collapsed almost completely. All reservations until the second quarter were canceled. Since March 18, our rooms have been almost empty. It is expected be the same in June. During the time of lockdown, our ÉS Bisztró and ÉS Deli have offered a takeaway service.

Arne Klehn: Within a couple of days in early March, 90% of our 2020 reservations have been either canceled or rebooked for 2021. We decided to remain open for those guests who would need hotel accommodation in Budapest. Our occupancy was minimal in the past period and it is expected to be very soft for the upcoming weeks.

Jonathan Pace AK: Since we are open, we are welcoming them even today, although at a very low number.

According to our forecasts, we expect the number of individual guests to start to increase as of mid-summer.

Unfortunately, we don’t see that timing for events, especially for the international events; they will start to come back only as of 2021.

BBJ: How are you going about reopening? Have you found new business opportunities?

Stephan Interthal

but are confident that we will return stronger than ever after that.

BBJ: Do you think the government has been supportive enough of your industry?

JP: There is no doubt it has been challenging for every government to find a balance between priorities relating to health, and the effects of the pandemic on the economy. The Hungarian government has risen to this occasion and we are extremely grateful for the support shown to us during these difficult times SI: It helped us that Hungary launched its first-aid packages on March 18. Also helpful was the credit moratorium until the end of the year. Likewise, we also use the recently introduced short-time working “Kurzarbeit” solution from May for three months.

AK: We have fully utilized the possibilities and were able to navigate so far. For the rest of the year, in terms of government support, dividing the hotel sector into Budapest and Countryside may be considered. Countryside hotels will benefit from the additional domestic demand, while for Budapest the demand will still not be there.

JP: We are slowly reopening our restaurants and we have reviewed our operating standards, to ensure our operation is tweaked down to the very detail, keeping the safety of our guests and colleagues as an absolute priority.

SI: We didn’t sit idle waiting for the end of the crisis. We prepared ourselves in a focused and targeted manner for the “rebound”. We have to look for new opportunities, keep an eye out for markets who are interested and deal more with them. We try to get one or two additional percent from the domestic market as well.

AK: While our hotel is in operation, we are about to finalize the implementation of Marriott’s latest cleaning protocols and safety measurements. Furthermore, we focus on reopening our DNB Restaurant and its terrace. We have also put great focus on its home delivery service, which is a great success! Last, but not least, we managed to define another new business opportunity: we will have a great surprise for Budapest later on, but the secret will only be revealed around mid-June!

BBJ: What have you been doing to support the community during this time?

BBJ: What are your expectations for the rest of this business year?

JP: There is no doubt that this will be a slow and painful recovery; however, we remain optimistic. Traveling has evolved from a luxury to a lifestyle, and we have no doubt people will start traveling again soon SI: For the rest of this year we do not expect any serious MICE business, because there will simply be no major meetings or events in the city. We think that Formula 1 will happen this year, and will take place at the Hungaroring; however, it will be without any spectators.

As of September, we expect individual business travelers to come back. We anticipate that we will run with occupancy of 30 to 40% from September to yearend.

AK: It is going to a very challenging period not only for us but for all my hotelier colleagues all over Europe. We will be struggling with the low demand,

Arne Klehn SI: Independent of corona, we have continued with our regular charity activities during the past months. We continue to support our two children’s homes with a larger grocery delivery every two weeks.

AK: Together with other Marriott hotels in Hungary and Hertz Car Rental, we coordinated a donation worth HUF 3.5 million to health institutions. Our DNB Budapest restaurant also supported the work of the National Ambulance Service with a HUF 1,300 donation for each of its Easter food home deliveries. In addition, we are preparing 50 meals for the staff of Szent László Hospital (an isolation hospital in Budapest for those with COVID-19) and the National Korányi Institute of Pulmonology every week until the end of June.

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Budapest Business Journal | June 5 – June 18, 2020

Special Report How has the global COVID-19 pandemic affected the legal profession in Hungary, are the labor laws now fit for purpose, will the crisis accelerate the use of digital technology and what of rule by decree?

Legal Market Talk: A Digital Reset?

10

Rule by Decree That Raised Concerns Seems set to End

12

Pro Bono: The Very Essence of the Legal Profession

14

Pandemic Changing the Landscape for Lawyers

16

Coronavirus Crisis Shines a Light on Labor Law

22

Photo by nep0/Shutterstock

Legal

10 | 3

Special Report

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Budapest Business Journal | June 5 – June 18, 2020

Legal Market Talk: A Digital Reset?

Our annual Legal Market Talk (as ever, featuring some of the top lawyers in Hungary) was, as you might imagine, dominated by the coronavirus pandemic. How has it affected the profession, what changes has it prompted, and what are the current and future implications a world that is very much not “business as usual”?

ROBIN MARSHALL

Our Legal Panel

Zoltán Hegymegi-Barakonyi, managing partner, Baker McKenzie Budapest

Ágnes Szent-Ivány, managing partner, Eversheds Sutherland Budapest

Erika Papp, managing partner, CMS Budapest

Kristóf Ferenczi, managing partner, Kinstellar Budapest

BBJ: How has COVID-19 changed the way you work?

Zoltán Hegymegi-Barakonyi: Baker McKenzie has always been committed to providing its people with access to a wide range of flexible and agile work arrangements “keep the lights on”, we have been operating to support them in balancing work and life, on a fully remote basis, successfully while continuing to meet our clients’ needs. collaborating both internally and externally Recent physical distancing requirements have with our clients through digital means. simply intensified the extent to which these During this period we completed a series arrangements are made use of. The biggest of transactions, successfully carried out change is that most of our interactions with numerous signing and closing processes clients are over videoconferencing rather and maintained our operations, despite the than face-to-face. Luckily, we have found novelty of the situation. clients very receptive to this.

Péter Berethalmi: All our lawyers István Réczicza: Dentons did not close moved from office work to home office at its office; however, we did swiftly implement the beginning of the state of emergency. our remote working protocol to ensure the Our finance and administrative team also health and safety of our colleagues. Since work from home office. We had a limited mid-May our colleagues our partially capability operation in our office building working from home or are in the office with secretaries working in reduced working abiding to new and strict health guidance. time. We closed our canteen and probably Ágnes Szent-Ivány: We commenced will not re-open it in the foreseeable future. working from home as of March 16.

As of now, home office is not obligatory Although we had used home-office and for our lawyers and we introduced special digital solutions previously, we now utilize house rules in the office building. We use the many advantages of the new digital Webex video conferencing frequently with platforms much more efficiently. We our clients and also internally with our keep in contact with our clients through colleagues. Weekly meetings and partner web conferences, work together with meetings are held via video calls. To our more colleagues and clients on projects surprise home office work was very efficient; using workplace platforms like Microsoft we faced no technical obstacles, workflow Teams or Zoom. We and clients use was the same as before. electronic signature more frequently and apply remote identification of clients.

BBJ: How many of your staff are working Collaboration is a key factor, what went from home? well from the beginning. More training András Posztl: Around 90-95% of our and conferences are organized via online colleagues are working from home. The platforms. Digitalization makes our work transition was quite smooth from a simpler and more efficient and we are technology perspective, as we invested convinced that this experience is good heavily in both hardware and software last basis for a new workplace model that will year. Our strong corporate culture has also at least partly remain in the future and been important in this time of crisis, and creates new opportunities and culture. will continue to be.

Kristóf Ferenczi: Kinstellar moved ÁSz-I: Practically our whole office works operations to “working from home” from home. We have two meetings via arrangements from the outbreak of the Teams per week. Our reception works, but COVID-19 crisis. Whilst keeping a only one colleague attends the office for a few minimum skeleton team in our offices to hours per day to handle mail and deliveries.

István Réczicza, Hungary managing partner, Dentons

Richard Lock, founding partner, Lakatos, Köves and Partners

András Posztl, country managing partner, DLA Piper

Péter Berethalmi, managing partner, Nagy és Trócsányi

KF: Having prepared our offices for the safe return of our staff, we are gradually letting our team back. As such, the number of our people working from home is varying but gradually decreasing.

What is happening with the law courts?

Are they functioning at all or in a reduced format, and is this different for different courts?

ZH-B: The courts are adapting. Where possible, face-to-face hearings are substituted with written submissions and videoconferencing. Certain procedural steps, such as expert examinations, have been entirely postponed temporarily. In our experience so far, there is more of a lag in cases at the first instance, with appellate cases more easily able to progress based on written submissions alone.

IR: The government introduced rules governing civil and administrative court proceedings during the state of emergency; the operation of courts is continuous in Hungary, with certain restrictions concerning hearings. In essence, hearings should be held exclusively via electronic means (i.e. videoconferencing), and if that is not possible, hearings should be replaced with an exchange of written briefs. Our office has experience with only the latter option as we see that the courts did not have the sufficient infrastructure in place to handle civil matters through videoconferences.

Due to the slowness of the in-writing procedure, we hope that the normality will soon return also to the courts.

AP: Emergency legislation has made remote hearings the default option for Hungarian courts. Via Video, the courts’ official video conferencing system, offers a solution for remote hearings in roughly 200 courtrooms nationwide.

BBJ What is happening with the backlog of court cases?

Erika Papp: No statistics are available yet regarding the operation of courts under these amended rules, however, it is certain that wherever it is possible, the court will prefer to adjudicate cases on the basis of written statements and without holding an in-person court hearing. In all other cases, where this is not a viable option, we have to wait until the end of the state of emergency for the proceedings to continue, which will most likely result in the piling up of court cases and postponed court hearings. Thus, once the threat of the epidemic has (at least temporarily) ceased, an intense life is expected to begin in courtrooms and court corridors. ÁSz-I: Although there was a two-week long judicial break period at the end of March, the courts have not accumulated substantial backlog, meaning business is almost as usual, though the courts are slower and less flexible than business life.

BBJ: What are the trends with business law, which are the worst affected areas for you?

AP: We feel lucky to be less affected than many other industries. There was a temporary slowdown in transactional activities in March and early April, but since then M&A work has peaked. Our employment and privacy lawyers have been extremely busy since the first days of the COVID-19 situation.

KF: In Hungary our practice remains busy, notwithstanding the crisis. Although we have seen some slowdown e.g. in real estate transactions, FDI driven M&A deals and contentious matters, the domestic M&A market continues to be active, as well as the financing and the energy markets, and also various large-scale projects are ongoing which provide good sources of work for us.

Our commercial team has become even busier as we have experienced a strong inflow of COVID-19 related client work across the board, both in Hungary and in the region, including employment matters and contract law advice.

Richard Lock: A surprising amount continues but it is not so easy to see new deals being put together. The banking moratorium has imposed something of a standstill on the finance market, but in the medium and longer term we anticipate a lot of restructuring and insolvency work.

Meantime, we have been busy with crisis related advice and, for example, acting for the banks managing the recent sovereign bond issue.

PB: Transactions are put on hold in general, litigation work continued as before. Corporate and commercial law work also continued.

In general new transactions are slowed down, except for some green filed developments.

BBJ: How does your pipeline for future work look. Are clients still looking for input on deals, or is everything held on pause?

ZH-B: Thankfully, we see our clients going full steam ahead. COVID-19 has presented several challenges as well as opportunities from a commercial perspective and we have had many clients seek assistance in navigating them. We are also invested in ensuring our clients are kept abreast of changes in the legal landscape arising from various governmental measures locally, regionally and globally.

EP: There is still a great deal of uncertainty on the market, which makes it almost impossible to say how future work will look. As per the optimistic view, we

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Budapest Business Journal | June 5 – June 18, 2020

PB: Definitely less work can be expected due to COVID-19, however, there are several new projects that still continue and litigation work is not affected either. Clients required more labor law advice than before.

BBJ: Will there be lasting changes brought about? Will more legal work be done remotely or electronically?

ZH-B: Working remotely has numerous advantages; holding meetings online, for example, can make them more accessible to people who would otherwise struggle to attend due to travel time, needing childcare, or health related issues. There is also a significant sustainability argument for working electronically. We are keen to retain these positive aspects of the recent changes in the future too.

EP: We can already see a massive shift towards the use of e-signature, digitalization, paperless employment, online payment, different payment terms in FinTech, and we can be sure that this transition will also be permanent in the future. We are quite certain that online meetings and deals will be the practice in the foreseeable future and there will be significantly less offline negotiations or meetings. Businesses as well as law firms slowly return to the workplace, however we experience many of our clients only return in rotation to avoid having many colleagues in the office at the same time.

AP: We plan for significant further investments in technology. Large global law firms seem to be in a better position to make these investments because of their economies of scale, but the exact outcome is still unclear.

Efficiency will also increase with less travel and more interactions in the virtual space. ÁSz-I: We are sure that more legal work will be done remotely, and electronic tools will be used more frequently. There will be more digital platform conferencing and training instead of traveling or meeting in person as it has now been tested and worked well during the pandemic and it is a time and cost saving method.

KF: We are finding this crisis accelerates previously commenced or considered changes in our approach to flexibility of working, the role of physical premises, digital collaboration and the value of time spent. For example, the practice of mandatory countersigning has been changing and is now exclusively being executed through virtual means (through skype or similar applications), a practice that clients are quickly getting used to.

RL: More will certainly be done online and it is extraordinary how smoothly the transition to remote working went within our office. However lawyering remains a people business and face to face working and meetings will be back.

PB: I definitely think that many more people will work remotely and the way law firms work will change significantly as a result of the COVID-19 state of emergency.

Law firms will realize that they do not necessarily need as much space as they had thought earlier and that some lawyers are even more efficient from home office.

BBJ: Is there anything else to add?

PB: It is difficult to see now what will be the final outcome but, in general, law firms need to adopt to the new situation.

They need to be more flexible in physical sense (how they work with their lawyers and with clients) and also commercially (they need to meet with ever more changing demands of clients).

INSIDE VIEW

New Market Standards in a Volatile Economic Environment dr. Dániel Orosz

Attorney, M&A Practice Group HEGYMEGI-BARAKONYI AND PARTNER BAKER MCKENZIE ATTORNEYS-AT-LAW

COVID-19 broke a 10-year-plus market uptrend and brought extreme volatility to markets due to the uncertainty of the economic outlook in many industries. Baker McKenzie, having had one of the leading mergers and acquisitions practices in Hungary and the CEE region for decades, manages a great number of M&A deals even during these extraordinary times and, thus, experiences many forms of such volatility of the markets and the various approaches that market participants take to address the unique challenges brought by the pandemic.

The current economic situation has brought into focus several issues regarding the preparation of deals which should give parties pause for thought.

When the legal terms of transaction documents are discussed, the evergreen question raised with lawyers is: what is the market standard regarding material adverse change (MAC), limitation of liability or seller’s warranties? Lawyers’ answers have always been subject to various circumstances but, previously, they included a certain range of options at least, within which the parties could consider their positions. Now, however, answering that question is more challenging.

Is it market standard, for example, to include changes in law or acts of god, like pandemics, into a MAC? Maybe it used to be; but is it still, and if “yes”, then in what form? In recent months, on an almost daily basis, governments have introduced new regulations regarding foreign investment restrictions (such as the very recent one adopted on May 25 by the Hungarian government on the acquisition of stakes in companies operating in strategic sectors, which will affect many transactions), employment, subsidies, taxes and customs, which significantly impact the legal and financial environment of business operations. Who should carry the burden of the risk of such external changes: the seller or the buyer? Toss a coin.

COVID-19 may stay with us; it may morph into COVID-20 and become something we will need to learn to live with, meaning that it may become a standard part of the economic environment. Accordingly, the COVID pandemic may not be deemed to be unforeseeable or unexpected in the future. Sellers will argue (and with due reason) that COVID-related situations should not trigger a MAC. Otherwise, what would be the point of signing a binding contract, which could be cancelled at any moment as the pandemic waves come and go at a moment’s notice?

Risks and financial consequences (which are inevitably the parties’ primary concern) can be allocated or split between the parties in many ways and can be reflected in the legal terms and conditions in different places within transaction documents.

Purchase price can be structured to handle future variables by purchase price adjustments and earn-out mechanisms which may be used if the parties cannot price in the future changes of the target business.

However, such mechanisms will thereby become much more complex and will involve heavy negotiations.

Considering the volatility of FX rates, purchase prices should be hedged if the currency alters from the currency of the target’s business.

Although it will be hard for sellers to guarantee the target’s future revenues, strong warranties related to the target’s contractual relationships and legal and financial conditions, including warranties regarding material contracts, legal disputes and outstanding payment defaults, can mitigate the risks to the target’s future incomes and operations for buyers.

Warranty and indemnity insurances will be more often used, which can be procured to cover potential outstandings of the transaction and to exclude the risk of the seller’s future financial insolvency.

It’s important to note that the coverage potentials of such instruments are limited and may cause the parties to price undisclosed risks into the purchase price.

Keeping in mind the wide range of available tools for risk allocation, and being flexible on their use, can help resolve sticking points during negotiations and efficiently contribute to the successful conclusion of deals.

Nevertheless, legal drafting will not protect against all risks and cannot grant a financial recovery in each case, or at least not immediately. What is extremely important in the current climate is that parties act responsibly when they decide on making a deal. Buyers should consider the various aspects which may impact the transaction. It is more important than even to run thorough due diligences on material issues and the potential risks of the target business, as well as its legal and economic environment, including the positions of suppliers and customers, regulatory matters, international trade and financing conditions.

At the same time, a seller’s transparent approach, including complete disclosure of information and financials, can provide comfort for buyers. Such an approach may make all the difference by supporting the smooth preparation and execution of a transaction and facilitating the chemistry between the parties, even in this unprecedented environment.

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will be back to normal by Q3 or Q4 of this year. Some clients say that they still have an appetite to transact, and some have already inquired about the “NHP Hajrá!” program which the National Bank of Hungary launched to mitigate the negative economic effects of the COVID-19 pandemic.

IR: I am extremely proud of our team as we have been kept extremely busy by our clients in the past months and managed to close several cross-border major transactions with an overall asset value of EUR 3.5 billion. Our team regularly acts as the main transaction counsel on many of the most significant M&A deals in Hungary and across the region. Even in the current challenging circumstances, working remotely, we closed deals involving Poland, Singapore, South Africa and Serbia, just to name a few. I hope that the second half of the year will be equally busy for us, but the future is currently very blurry. We don’t know when and if a second wave of the virus will pick-up, what effect that will have on the economy; these and other uncertainties in the market may decrease the appetite of investors.

AP: We have seen some deals suspended, but the pipeline is still very busy for the next three or four months, filled with large local and cross-border transactions. The question is not the short term, and we are also confident about the long term, but there still is uncertainty about the mid-term effects of the virus on the legal market. The final effects will depend on the severity of the recession and the speed of recovery. ÁSz-I: There are still notable deals under planning, related to which our knowledge and expertise has already been requested by our clients. Not everything has been put on hold and we expect to continue M&A transactions and restructuring. Some new real estate deals are already in the pipeline.

KF: We expect relatively strong deal flow in terms of M&A deals, on the financing market, in the energy sector and in contract renegotiations – in particular relating to large projects – as well as a pick-up in disputes.

RL: Despite all the uncertainty, some things never stopped (e.g. internal restructuring or long-term strategic steps) and it is clear that those who can, want to get business moving again as soon as possible; as ever for lawyers, those in trouble also can produce work and need advice. The combination of existing deals’ continuing momentum, crisis-related advice and early stages of new deals have kept us reasonably busy during the lockdown. There is uncertainty over how long that can continue, and how quickly the country and the global economy comes out of the lockdown, and whether there is sufficient clarity for decision making to recommence. In the mediumto long-term there is likely to be no shortage of work, whether restructuring and insolvency related to those businesses in trouble (e.g. tourism), or opportunistic buyers seeing assets available for lower price levels. In the longer-term, Hungary may be able to benefit from COVID and de-globalization related shortening of supply chains, i.e. more Asian industrials seeing a need for manufacturing capacity in Europe. The automotive industry is key for Hungary, and the recent BMW decision to pause the Debrecen development is serious but, on the other hand, the many developments related to electric vehicle technology seem positive and likely to grow.

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Rule by Decree That Raised Concerns Seems set to End ‘Reckless Speech’

In its attempts to keep the spread of coronavirus at bay, Hungary introduced a state of emergency in March in which Parliament allowed the prime minister to rule by decree.

With that, criticism over the rule of law in the country, a topic widely discussed in past years, reignited.

Parliament is expected to vote on ending the state of emergency, and rule by decree, on June 20.

CHRISTIAN KESZTHELYI

As this article was being prepared, the United States passed a grave milestone: 100,000 confirmed deaths relating to the novel coronavirus. In the EU27, this number passed 125,000. Although nations are cautiously easing restrictions and economies are hoping for some breathing space in which to recover, at the beginning of March, when COVID19 started spreading in Europe, the outlook was gloomier.

Answering the spread of coronavirus, on March 11 the Hungarian government declared a state of emergency, with measures, clarified in government decrees, remaining in force until revoked. Under the constitution, the Hungarian government can call a state of emergency for

15 days.

To extend that, two-thirds of the lawmakers need to vote for it in Parliament.

On March 23, the government submitted its request for an extension.

Although a motion to vote on the bill in an expedited procedure did not get fourfifths support it needed to be discussed there and then, the house, where governing party Fidesz controls two-

“That’s what the proposed Hungarian law is saying, creating sanction for reckless speech that could impair or thwart efforts to protect people from the spread of the virus. We’re in a state of emergency, by the way. Lives are at stake. This gross distortion of the facts is biased and irresponsible,” he added.

In an interview with the British public interest broadcaster BBC on April 22, Kovács rejected allegations that the Coronavirus Protection Act would grant the government “unlimited” powers, adding that such a scenario would be “regrettable”.

In the interview with Stephen Sackur of the “Hardtalk” program, Kovács also dismissed allegations that Hungary heading toward a dictatorship as “ridiculous”, saying that it was a line of accusations the Orbán-led Fidesz government has been receiving for a decade.

Two busy months have passed since the law was enacted, almost Minister of State for International Communication and Relations three since coronavirus started its Zoltán Kovács has made a strong defense of Hungaryʼs rule by spread in Europe. Countries are now decree approach. Photo by Károly Árvai/Prime Minister’s Office. carefully easing isolation and social distancing restrictions, airports are beginning to reopen for travel and thirds of the votes, gave the green light Orbán has completed his project of limited tourism in Europe soon, and to the bill six days later, on March 30. killing democracy and the rule of law hopes are high that we are over Extraordinary times, by common in Hungary. Clearly, the actions of the the worst of the virus, healthcare-wise. consent, call for extraordinary Hungarian government are incompatible What will happen to the economy, actions. The Coronavirus Protection with EU membership.” though, is still highly uncertain.

Act gave Hungary’s Prime Minister The paper added that Dacian Çiolos, a Viktor Orbán power to rule by decree former Romanian Prime Minister and EU (suspend some legislation, diverge commissioner who now leads the liberal from legal provisions, take group, said it was “shameful this dreadful “This proposed law is extraordinary measures) in the corona is abused in such a manner.” like the sanction against interests of securing the life, health, According to politico.eu, European property and rights of those living Commission President Ursula von der falsely shouting ‘Fire!’ in in Hungary, as well as to cushion the Leyen issued a statement on a crowded movie theater.

March stability of the national economy.

The law provided leeway for canceling That’s the classic legal scheduled by-elections and prohibiting calling for all emergency measures to the scheduling of new by-elections analogy for speech that be “limited to what is necessary and and any local or national referendums. is not protected because strictly proportionate” and not lasting It also added some harsh-sounding indefinitely, though she did not mention provisions: prison penalty of one to it is dangerous and false.”

Hungary by name. eight years for the violation of isolation, In the United States, Eliot L. Engel, up to a year for obstructing measures chair of the U.S. House of Representatives’ that aim to contain the spread of foreign affairs committee, was more COVID-19 spread and up to three years Almost two months after the coronavirus explicit, saying Orbán was making for disseminating “false” or “distorted” law under fire had been approved, the “a blatant power grab in the face of facts that “incite unrest”.

Hungarian government submitted a bill on May the worst global health crisis in recent Concerns Reignited history.” He said the legislation As the law did not include an expiry date marginalized the Hungarian parliament to put an end to its extraordinary powers. on the prime minister’s power to rule and allowed the prime minister “to The authors of the bill acknowledged the by decree, bar the fact that legally the rule by decree like a dictator.” criticism, albeit as a “coordinated political house, dominated by the governing party, Writing on Twitter, former Italian Prime campaign” set to cause panic. could theoretically revoke it at any time, Minister Matteo Renzi wrote „after what “Although these baseless attacks, concerns about the rule of law in Hungary Orbán has done today, the European fortunately, did not influence the success were reignited.

Union MUST act and make him change of the pandemic defense, all of those who Opponents of the law, both his mind. Or, simply, expel Hungary from questioned the extraordinary measures domestically and abroad, voiced fears the Union.” during the most difficult periods of the of critical journalists being muzzled The Hungarian government’s struggle and tried to undermine the and the governing party’s power being international spokesman, Zoltán Kovács, legitimacy of government decisions enhanced. The Economist portrayed said soon after the law made international will bear historical responsibility,” the the prime minister as a “Bond villain” headlines that media coverage had been and, in another article, compared his “grossly distorting” of the facts, and blamed authors of the bill say, as cited by the news agency MTI. increase of power to that of Russia’s the sensationalism of newsrooms.

The vote on ending the state of Vladimir Putin and Turkey’s President “This proposed law is like the sanction emergency is to take place two weeks Recep Tayyip Erdogan. against falsely shouting ‘Fire!’ in a after the submission of the bill. Although The United Kingdom’s left-leaning crowded movie theater. That’s the a separate bill would serve to keep some daily Guardian on March 31 quoted classic legal analogy for speech that is provisional measures in force, such as Sophie in’t Veld, a Dutch liberal MEP, not protected because it is dangerous keeping the coronavirus response body in who chairs the European parliament’s and false,” Kovács said, according to place for the possibility of a second wave. rule of law group, as saying, “Viktor Hungarian state news agency MTI.

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PRESENTED CONTENT

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Pandemic Proves law can Work Digitally companies, we will return to the office in June; however, that will be in rotation and with implementing strict hygiene and other rules to keep ourselves and our colleagues safe. I believe we will have to have this system in place for a longer period of time.

If the virus comes back in the autumn, we may have to send people home again. But the new digital world is working really well. We can work more from home in the future, so we may never be back as it was with everyone in the office all the time. That is harder from a team building perspective. We can work from home, but it is not the same when you do not meet, do not exchange ideas, there no brain storming.

Erika Papp, managing partner of CMS Budapest, reflects on how the COVID19 crisis has changed the way Hungary’s largest law firm, based on the number of attorneys with a license to practice, goes about its business.

BBJ: How have your clients reacted? Was there a call to stop projects, or a demand for more help? What have been the most common concerns?

EP: Digitalization has been the big thing.

If you have a team doing technical law, you are being asked to speed up these projects.

There are other examples; for instance, our real estate team has completed a major transaction during the lockdown in a completely digital manner, they have not met the client at all, and meetings, negotiations took place online.

ROBIN MARSHALL

BBJ: How has the COVID-19 crisis impacted the Hungarian legal market?

Erika Papp: It has had a very severe impact. First, because there are smaller law firms who have been hit from an IT point of view. Some did not have the equipment to send home colleagues.

It was an IT challenge for us as well because we are a large organization, but our lawyers already work from home regularly and we could easily ensure that our business development, finance and IT teams could also do so. For some of the business support functions it was more difficult, for example the secretaries or reception, but we managed to overcome that in a couple of days’ time. I have heard stories that it has been a major IT challenge for smaller firms, and we even managed to secure new assignments due to this. Even more severe has been the business impact.

A lot of transactions were suspended, though they are slowly restarting.

The ordinary courts have been suspended here for a while. Arbitration courts, depending on what technology they have, do continue to work in a distanced, virtual way. There will be a back log as a result. Litigation teams are trying to work out what they can do to help the process now, filing motions etc.

But no face-to-face court hearings have been held since the state of emergency was declared, and the summer recesses will be due at some point between the second half of June and August 20.

BBJ: Has it created any particular opportunities or challenges for you?

EP: Well, there has been a tsunami of new legislation: the mortarium on loans, lending programs, national bonds; corporate and competition lawyers have been very busy with the new government support programs.

Of course, everyone is working from home, and there are some challenges there which are the same for everyone. Some colleagues love the office environment and simply prefer to work together in teams of two or three. We now see a certain

BBJ: Have there been any key issues highlighted by the crisis?

EP: Sorting out documentation issues, signatures, notarized contracts. It is all rather difficult at times like this! Clients want simple documents and forms, less should be notarized or read out aloud in front of witnesses than is the case now.

Hungary is rather bureaucratic in this regard; so much has to be done before a notary public, but does it really need to be?

Erika Papp, managing partner of CMS Budapest. desperation among some of our male colleagues – with young children at home – who are desperate to get back to the office!

BBJ: When do you think Hungary’s economy might recover? Do you have any insight into how a “return to work” will be planned?

EP: We are monitoring the situation on a daily basis, but we are talking about a long game, at least until a vaccine is found against the virus.

Once we find that, I think we will be OK. The question is how long will it take? If it is six-nine months, I think the economy will recover quite quickly. If it is any longer, I think it will be much harder. We are a corporate law firm so what we are doing follows what the economy is doing. Hungarian businesses, as opposed to the multinationals, tend to be small and are therefore prone to running out of money. I think there will be a lot of bankruptcies if we cannot recover soon. I have heard the government is preparing emergency legislation on bankruptcy and insolvency, because it has to have a “Plan B.” But I have some optimism. Talking to clients, the banks are sitting on

a lot of money; there is no systemic financial risk. We have a reasonable pipeline of transactions; as long as clients are able to convince banks, they will continue lending.

BBJ: When do expect your business to return to “normal”, and what might that “normal” look like?

EP: Starting from a profitability and business-to-business point of view, our utilization levels are much better than other offices in the region. That is because our office is larger and has a mix of large-scale transactions and day-to-day bread and butter corporate maintenance: HR issues, IT issues, small day to day work that never stopped and kept us going, though that will inevitably slow in the summer.

From an organizational point of view, I think we have already seen that we will never go back in a lot of ways, because people are scared and do not want get back to office. We have to build up a very safe environment for at least a year to a yearand-a-half until a vaccine is found. That may mean working in smaller teams, for example, for the whole summer, or working in staggered shifts. Like several other

BBJ: What will be the most important legal and business tasks for helping the markets reopen?

EP: I think the government has done a pretty good job. When new legislation is made in a hurry and in very difficult circumstances, you can always find weak spots, issues that need fixing if you want to. The important thing then in to bring in new legislation. Employment support, for example, was not being delivered as widely as the government would have hoped. The government understood this and changed the law.

I think new insolvency legislation will be required or there will be a wave of insolvencies and bankruptcies.

We have started a program regionally called Recovery & Rebound that focuses on businesses returning and key issues our clients may face in the next months or so. Besides this, we have been continuously training our people – this is nothing new at CMS – and are currently running training on restructuring and insolvency not only for our banking professionals.

BBJ: What do you think will be the lasting impacts?

EP: How we go about law will change in the short-term, whatever else changes, at least for the next one, one-and-a-half years. We [at CMS] are lucky because all this day to day work has helped keep us afloat. I think we are going to see a lot more digital application of law in the future.

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Budapest Business Journal | June 5 – June 18, 2020

Pro Bono: The Very Essence of the Legal Profession them there will always be many with a drive to help, not just to do their job from 9 to 5.

For more than a decade, the Financial Times has awarded annual prizes to the most innovative lawyers on three continents. The FT Innovative Leaders program covers legal innovation in more than 400 law firms.

Last year the partner of a Hungarian law firm received the prestigious prize in the Rule of Law and Access to Justice category, for a pro bono project. We take a look at this field.

Progress of Society

“They want to contribute to the progress of society, as this is the very essence of the legal profession,” Politov says. “It is very important to note that we treat each case equally, irrespective if we charge for it or not. Everybody takes this very seriously because the responsibility of taking the case or supporting someone is very big, both legally and for the image of the company.”

“They want to contribute to the progress of society, as this is the very essence of the legal profession. It is very important to note that we treat each case equally, irrespective if we charge for it or not. Everybody takes this very seriously because the responsibility of taking the case or supporting someone is very big, both legally and for the image of the company.”

KÁLMÁN BÉRES

A quick search for pro bono activities in Hungary reveals that many lawyers and law firms actively participate in such projects. The Hungarian Bar Association (Magyar Ügyvédi Kamara, or BÜK) estimates that at least 10,000 individuals encounter problems accessing legal assistance, in most cases due to lack of financial resources.

Such mass demand needs organized initiatives. On October 24 last year, BÜK organized 117 lawyers for its first Pro Bono Day, offering free of charge legal assistance to clients who registered for the event. It was so successful that BÜK was awarded PILnet’s Pro Bono Lawyer Prize of 2019 for Hungary.

It is generally accepted that complicated legal issues incur heavy costs. Commercial companies might find ways to budget for these costs, for non-governmental organizations, heavily dependent on donations, they can be unbearable burdens. The PILnet Foundation in Hungary aims to ease this by bringing together NGOs with good causes and law firms with good intents.

“The beginnings of PILnet in Hungary date back to 2005,” Tamás Barabás, senior legal officer in PILnet’s Budapest office told the Budapest Business Journal. At that time, many American and British law firms had established offices in Hungary. Pro bono work has a very long tradition both in the Anglo-Saxon legal world, but back in the mid-2000s there were only sporadic initiatives in Hungary.

Atanas Politov, Europe director for positive impact at Réczicza Dentons Europe LLP.

Pro Bono Clearinghouse

The market needed a “clearinghouse”, able to connect the needs of the nonprofit sector with the available professional resources of the law firms. This is the role PILnet was formed to fill, Barabás notes.

“It is true that in a market economy, doing free work is against all rules of competition.

However, there are two professions where people have been doing free work for centuries: doctors and lawyers.”

Today, a law firm receives plenty of emails daily requesting pro bono assistance. Verifying all these is very time consuming and PILnet helps by selecting suitable matters, compiling these on a list and sending it out to the law firms, which choose those cases they wish to handle.

PILnet only promotes nonprofits NGOs and social enterprises, as private cases are a different area. But the workload may involve representing an individual (or individuals) whose cases are supported by an NGO, for example the rights of specific women or children, Barabás says.

PILnet also acts proactively, promoting “Pro Bono Friday”, already successfully conducted in April and May, when pro bono lawyers aided no less than

18 NGOs.

Law firms and companies also offer other means of legal support for nonprofits as part of the PILnet-lead “Compliance Bridge” project.

But law firms are profit-oriented companies, so what exactly are the motivations behind accepting free of charge cases? “It is true that in a market economy, doing free work is against all rules of competition. However, there are two professions where people have been doing free work for centuries: doctors and lawyers,” says Atanas Politov, Europe director for positive impact at Réczicza Dentons Europe LLP. Globalization and market consolidation have led to new situations on the market.

It is not unusual nowadays to have 60-70 lawyers in one firm, or even more. Among

But pro bono work can also be an invaluable opportunity for training young lawyers. All such cases must be conducted by the exact same rules and procedures as any other. At the beginning of their careers, young lawyers rarely meet clients directly, while a pro bono case means they can get hands-on experience with a case, from start to end, Politov explains.

Pro bono is a high valued area not only in Hungary, but also in other Eastern European countries. In Romania, many business law firms stepped up their pro bono activity as part of a huge nationwide response to the coronavirus pandemic and rallied to help those impacted by the health crisis. The free legal hotline “Lawyers on Duty” is such an initiative.

The service, launched by Romanian law firm Zamfirescu Racoţi Vasile & Partners (ZRVP) on

March

20,

was available throughout the state of emergency in Romania. It served as a phone-based counselling hotline and resource and was created to offer immediate, personalized legal guidance to the many people affected by the current situation.

It aimed to provide easy access to the information and resources needed to make an informed decision about the legal issues callers were facing. The team of lawyers received hundreds of calls related to a variety of legal problems affecting personal and professional lives of fellow citizens, with an uptick in employment-related cases, limitation of citizens’ rights issues, attachments and enforcement procedures, bankruptcy filings, bank loans, and family law matters such as domestic violence, divorce and children visitation rights.

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Pandemic Changing the Recent COVID-19 related HR Landscape for Lawyers INSIDE VIEW

and tax measures in Hungary Barnabás Buzási

Senior Associate, Employment

Senior Associate, Tax

WOLF THEISS BUDAPEST

WOLF THEISS BUDAPEST

In response to the COVID-19 outbreak, the Hungarian government declared a state of emergency to deal more effectively with the resulting challenges and enacted several employmentrelated measures.

NOTE: ALL ARTICLES MARKED INSIDE VIEW ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

János Pásztor

Before the pandemic, any type of remote work was agreed on between employers and employees. Now, employers can instruct employees unilaterally to work remotely. In addition, the government suspended the application of the latest date when a change in the work-schedule can be communicated and extended the upper limit of the term of the working time frame up to 24 months.

Accordingly, any change in the workschedule can be communicated even on the day prior to the day affected by the change without considering such work as overtime. By introducing a longer working time frame, the employer can instruct employees to stay at home for a longer period, and the days off could be scheduled as working days following the return to the workplace.

Three types of subsidies for businesses have also been introduced. The first is applicable for businesses in research and development with a capped monthly amount of HUF 318,920 (approximately EUR 910) per employee. Secondly, a subsidy is available upon the reduction of the daily working hours of an employee within a specified range, to the maximum monthly amount of HUF 112,418 (approximately EUR 321) / employee.

Lastly, employers hiring registered job seekers may be eligible for aid to a capped amount of HUF 200,000 (approximately EUR 570) / month. Employers must meet several preconditions to be eligible for these subsidies; one of which is that all the subsidies are linked to lay-off prohibitions for different periods.

The state of emergency is planned to end soon, and by May 26 a decree will be issued defining the “surviving” outbreakrelated measures. However, it is certain that the lay-off prohibitions linked to the subsidies will be applicable even after the end of the state of emergency. If employers introduced a longer working time frame, they can terminate it before its expiry date. Home office has become

more popular due to the outbreak but remains unregulated by the Labor Code. It is likely that new legislation will be passed to establish its main rules.

The following tax measures have been enacted to mitigate the effects of the outbreak on the economy and state revenues.

The deadline for declaring and paying corporate income tax, local business tax, energy suppliers’ income tax, small business tax and the innovation contribution for 2019 that would otherwise be due between April 22 and September 30 has been postponed until September 30 to ease the cash-flow pressure on businesses.

The rules on the development reserve have also been relaxed, i.e., businesses may account for development reserve up to 100% of the pre-tax profits instead of the previous 50% threshold, but its amount may still not exceed HUF 10 billion (approximately EUR 28.5 million).

Businesses subject to corporate income tax may benefit from this scheme starting from the 2019 tax year. Based on a recent legislative proposal, this relaxation is not a one-off measure and may be utilized in subsequent tax years.

The reduction of the rate of the social tax by 2% to 15.5% effective from July 1 is yet another preferential measure. Certain industries (e.g., media, tourism, airlines) also received additional temporary benefits reducing the tax burden on wages (e.g., 17.5% social tax, 18.5% social security contribution).

Additionally, businesses may be granted a tax reduction or payment facilities on a one-off basis on their request submitted by the 30th day following the lifting of the state of emergency.

Besides preferential tax measures, a steeply progressive retail tax has been introduced. This levy will also apply to the handing-over of goods to customers in Hungary by a foreign resident, where such goods are not supplied via a Hungarian branch office, i.e., certain webshops may be subject to retail tax. This tax will likely have a significant impact on the profits of large retail businesses, as they have limited room for renegotiating the contractual terms with suppliers to shift the tax expenses due to recently introduced legislative constraints.

www.wolftheiss.com

Just 20% of lawyers say their income has not been cut in the past few months, according to a survey of more than 1,000 Hungarian attorneys. Some may have to give up on their career, the reportʼs author says.

ROBIN MARSHALL

The lawyers were asked to fill out an anonymous online survey conducted by Pro/Lawyer Consulting, a Hungarian firm specialized in marketing for

work three years under an attorney to be eligible for the Bar exam), 67% stated that their salary has not changed in the last months. While 14% said their salary had decreased, many others are currently on unpaid leave, or work reduced hours.

Real Estate on Hold

The greatest decrease of work was in real estate, one in four lawyers remarked.

Litigation and corporate matters follow in second with 15-20% noting that they experienced a reduction. A relatively lowly 5% of respondents said the decrease was significant with damages-related, criminal, and family law cases.

“The rate of M&A and finance matters were reduced by 5% as well, but the analysis revealed that these fields employed 38% of the workers of large firms, which is understandable, as these transactions are concentrated in large firms,” says Máté Bende, owner of Pro/ Lawyer Consulting.

The largest growth was in the field of labor law, according to 32% of respondents, with claim management taking second place.

The survey also asked trainee lawyers how their workload has changed in the last few months. Half stated that they have less work, 6% have almost no work and Máté Bende lawyers and the legal sector. The survey was based on self-declaration, and examined changes in workload, income, and the fields of law with most and least work.

Of the respondents, 55% work in Budapest, 28% in a large countryside city, and 17% in a small city or town. In total, 73% of the respondents operate as sole practitioners, 18% in a small office, and the rest work in a medium, large or international law firm. Although the survey was not representative, this rate corresponds with the national breakdown of the 12,000 lawyers practicing in Hungary, Pro/Lawyer Consulting says.

Only 20% reported that their income has not decreased in the last months. Digging deeper, 20% said they experienced a drop of 10-30% in revenue,

30% saw

a 30-60% decrease, and 22% experienced more than 60% decrease in earnings.

Of trainee lawyers (those who have passed their law degree but have to

9% have

lost their jobs. On the other hand, 16% of respondents stated that they have more work than a few months ago.

“There will be a lot of trainees in the market again, this is going to push down their salary, and it is going to be the firms who will select among the trainees. Some people will have to give up on a career as a lawyer.”

Only 1% of respondents answered that just 0-10% of lawyers were affected negatively by the pandemic. A little under half (45%) believe that everyone or almost everyone has been affected, and a third say just half of attorneys have been affected.

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Budapest Business Journal | June 5 – June 18, 2020

Hopeful

A fifth of the lawyers are hopeful and think that every practice will survive the crisis.

Some 42% of respondents thinks that 10% of law firms will fold, 23% believe that 20% of firms will go under; and 12% forecasts a 30% hit rate.

Trainee lawyers are not so optimistic, one-quarter think that many of them will lose their jobs in the next few months.

Another quarter believe their salary will be reduced, 10% believe that will be for the long term.

“In the last few years, there was a lawyer shortage in the market, firms were competing for the trainees offering great salaries,” explains Bende.

“It is worth checking out the job portals; a few months ago

Dentons has received the National Law Firm of the Year Award for Hungary for the fifth consecutive year at the IFLR European Awards. Organized annually by International Financial Law Review, the awards honor Europe’s most innovative firms and deals.

“This award recognizes Dentons’ significant achievements in Hungary and elsewhere in the CEE/SEE region, and the work that the Budapest team has done on major projects and transactions over the past 12 months,” the law firm said.

Meanwhile, DLA Piper has been named Hungary Law Firm of the Year at the Chambers Europe Awards 2020, which was held digitally on Twitter. It is the third time DLA Piper Hungary has won the award in the last four years.

“This award is one of the most prestigious in the legal industry and we are proud to win it again.

We owe our deepest gratitude to our clients, colleagues and peers who have made it possible for us to once again win this prestigious prize. We trust that our integrated services, commitment, and hard work have created real value for all of them,” said András Posztl, country managing partner of DLA Piper Hungary.

20-30 law firms

were looking for trainees, nowadays you cannot see more than four or five advertisements. There will be a lot of trainees in the market again, this is going to push down their salary, and it is going to be the firms who will select among the trainees. Some people will have to give up on a career as a lawyer.”

More than 75% of the lawyers surveyed believe that there is a need for some kind of governmental help (rising to four-fifths among sole practitioners), but plenty also expect more from their bar association, stronger enforcement of claims, and membership fee discount. If the lawyers are not working, they still have hundreds of thousands of expenses: rental fees, bar association fees, liability insurance and also maintaining the infrastructure of their practices.

17% of the trainees believe that from now on, it will be a basic requirement to work in home-office, but there has been more criticism dedicated to the court system; mainly because of the deadlines, the difficulty of administration and quite wide criticism of virtual trials via video link.

While the fact that 90% of lawyers answered that there had no lay-offs in the last few months might seem like good news, the majority of the lawyers who filled out the survey work as sole practitioners. In those firms where there were lay-offs, it mostly affected

Has Your Income Decreased in the Past Months Because of the Virus Situation?

2.2 5.6 20

3.7

21.7

22.2

24.6

No Yes - by 10-30% Yes, I’m on unpaid leave

Yes - by 30-60% Yes - more than 60% Yes, I work fewer hours Rather not say

INSIDE VIEW

Keeping Business Ventures Alive: The Role of Directors and Risks of Recovery Plans Ákos Mátés-Lányi

Ákos Bajorfi

Counsel, Corporate/M&A

Counsel, Corporate/M&A

Noerr and Partners Law Firm

Noerr and Partners Law Firm

Over the last several weeks, the coronavirus outbreak has had a damaging effect on various businesses throughout the global economy.

Certain sectors are hit in a massive way (e.g. tourism, automotive); however, almost every business has felt the harsh economic consequences which necessitate immediate answers and steps.

We expect that the trends will be similar to those of the financial crisis of 2007-2008 despite the different triggering factors. The lesson was learnt the hard way at that time, but the experience gained can serve as a basis for future business decisions.

In spite of the measures put in place by the government, the regulators and the financial sector, it is not a wild guess to state that some business ventures in Hungary will have to make hard decisions as to their future operation that may entail various steps ranging from the (i) optimization and reshuffling of the current organization to (ii) the termination of the business in its entirety.

Role of Directors

As the persons responsible for day-today operations, the directors will be the ones who will face the financial difficulties first; therefore, they must carefully consider the available (and often conflicting) options to (i) ensure the operation of their companies; and (ii) avoid (personal) liability issues. It is important to outline that the rules set out in the Hungarian Insolvency Act do not make a director liable for the occurrence of the insolvency itself.

Instead, what may trigger a director’s liability are the actions of the director that disregard the creditor’s interests after the threat of insolvency arose.

For the purpose of the Hungarian Insolvency Act, the “point in time when the threat of the company’s insolvency occurred” shall be the date when the directors either were aware, or should have been aware on the basis of the enhanced level of duty and care applicable to the persons holding such positions, that the company would not be able to settle its debts as they become due. The “point in time when the threat of the company’s insolvency occurred” shall be analyzed on a caseby-case basis and we believe that this is key in terms of directors’ liability since, after this date, no decisions

can be made which would harm the creditors’ interests (e.g. repayment of intercompany loans, or taking up “luxury” expenses which are not connected to the essential operation of the business).

Measures to be Taken

After the occurrence of the insolvency situation, the directors are under the obligation to take the following steps: (i) assess the situation without delay and stop making any payments contrary to the Hungarian Insolvency Act; (ii) convene a company shareholders’ meeting without delay in order to allow the shareholders to decide on how to secure the future financing of the company; and (iii) notify the relevant authorities as per the applicable rules, if the company is operating in a regulated market.

If the directors proceed as outlined above and if they do not carry out any fraudulent transactions (for example, the undervalued sale of assets), then the liability of the directors would not arise in relation to the insolvency of their company.

Risks of Recovery Plans

Based on information received from the directors, the decision as to the business venture’s future operation will ultimately be made by the shareholders. In order to safeguard their businesses built for long years, business owners may consider alternative options to restructure their companies.

Nevertheless, any alternative option requires careful and thorough tax and legal planning in order to (i) mitigate the associated risks (including potential asset stripping); and (ii) handle the potential claims of creditors and competent authorities.

We also note that, in addition to the civil law consequences, lawmakers are protecting the creditors’ interests by criminal law measures as well; therefore, it is in the best interests of the owners and the directors to prepare recovery plans in full compliance with the applicable laws.

www.noerr.com

NOTE: ALL ARTICLES MARKED INSIDE VIEW ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

administrative staff, although in about 4% of cases lawyers had been let go as well.

Award-winning Law Firms

Special Report | 17

18 | 3

Special Report

www.bbj.hu

Budapest Business Journal | June 5 – June 18, 2020

Top-ranked law firms BELOW IS THE LIST OF LAW FIRMS WITH INTERNATIONAL AFFILIATIONS OPERATING IN HUNGARY THAT HAVE BEEN RECOMMENDED IN THE MOST AREAS OF LEGAL ACTIVITIES IN 2020 (IN TOP CATEGORIES OF VARIOUS RANKING BODIES, E.G. BAND 1 WITH CHAMBERS EUROPE AND CHAMBERS GLOBAL AND TIER 1 WITH LEGAL 500 AND IFLR 1000).

CHAMBERS GLOBAL 2020 BAND 1

CHAMBERS EUROPE 2020 BAND 1

LEGAL 500 2020 TIER 1

IFLR 1000 2020 TIER 1

TOTAL NUMBER OF RECOMMENDATIONS

3

5

10

3

21

1

3

5

3

12

1

3

5

2

11

1

3

4

2

10

–

3

5

1

9

–

2

7

–

9

1

2

4

–

7

–

–

4

3

7

1

2

2

–

5

–

1

2

1

4

CMS

DENTONS

DLA PIPER HUNGARY

ANDRÉKÓ FERENCZI KINSTELLAR HEGYMEGI-BARAKONYI AND PARTNER BAKER MCKENZIE ATTORNEYS-AT-LAW

LAKATOS, KÖVES AND PARTNERS

OPPENHEIM

SIEGLER BIRD & BIRD ÜGYVÉDI IRODA SZECSKAY ATTORNEYS AT LAW

LENGYEL ALLEN & OVERY

3

www.bbj.hu

Budapest Business Journal | June 5 – June 18, 2020

Special Report | 19

Top-ranked law firms CHAMBERS GLOBAL 2020 BAND 1

CHAMBERS EUROPE 2020 BAND 1

LEGAL 500 2020 TIER 1

IFLR 1000 2020 TIER 1

TOTAL NUMBER OF RECOMMENDATIONS

–

1

2

–

3

–

1

1

1

3

–

1

1

–

2

–

1

1

–

2

–

–

1

–

1

FORGÓ, DAMJANOVIC & PARTNERS

–

–

1

–

1

KAPOLYI LAW FIRM

–

–

1

–

1

VÁMOSI-NAGY ERNST & YOUNG LAW OFFICE

–

–

1

–

1

VJT & PARTNERS

–

–

1

–

1

NAGY & TRÓCSÁNYI

WOLF THEISS BUDAPEST

JALSOVSZKY

SBGK ATTORNEYS AT LAW

DANUBIA LEGAL

CHAMBERS GLOBAL 2020 LEGAL ACTIVITIES

BAND 1

BAND 2

BAND 3

BAND 4

BANKING & FINANCE

Andrékó Ferenczi Kinstellar CMS DLA Piper Hungary

Dentons Lakatos, Köves & Partners Lengyel Allen & Overy

Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Siegler Bird & Bird Ügyvédi Iroda Szecskay Attorneys at Law Wolf Theiss Budapest

Deloitte Legal Göndöcz and Partners Law Firm HP Legal Hajdu & Partner Law Office Vámosi-Nagy Ernst & Young Law Office

CMS Dentons

Andrékó Ferenczi Kinstellar DLA Piper Hungary Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law

Oppenheim Schoenherr Hetényi Attorneys at Law Siegler Bird & Bird Ügyvédi Iroda Wolf Theiss Budapest

Szecskay Attorneys at Law VJT & Partners

CORPORATE/M&A

Lakatos, Köves & Partners Lengyel Allen & Overy

DISPUTE RESOLUTION

CMS Oppenheim Szecskay Attorneys at Law

DLA Piper Hungary Lakatos, Köves & Partners Nagy és Trócsányi

Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Siegler Bird & Bird Ügyvédi Iroda Wolf Theiss Budapest

20 | 3

Special Report

www.bbj.hu

Budapest Business Journal | June 5 – June 18, 2020

CHAMBERS EUROPE 2020 LEGAL ACTIVITIES

BAND 1

BAND 2

BAND 3

Banking & Finance

Andrékó Ferenczi Kinstellar CMS DLA Piper Hungary

Dentons Lakatos, Köves & Partners Lengyel Allen & Overy

Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Siegler Bird & Bird Ügyvédi Iroda Szecskay Attorneys at Law

Capital markets

Andrékó Ferenczi Kinstellar Lengyel Allen & Overy

DLA Piper Hungary Gárdos, Füredi, Mosonyi, Tomori Lakatos, Köves & Partners

Kapolyi Law Firm Siegler Bird & Bird Ügyvédi Iroda

Competition / Antitrust

Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Oppenheim

CMS Dentons Lengyel Allen & Overy

Andrékó Ferenczi Kinstellar DLA Piper Hungary Lakatos, Köves & Partners Schoenherr Hetényi Attorneys at Law Szecskay Attorneys at Law

Corporate / M&A

CMS Dentons DLA Piper Hungary

Andrékó Ferenczi Kinstellar Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Lakatos, Köves & Partners

Lengyel Allen & Overy Oppenheim Siegler Bird & Bird Ügyvédi Iroda Wolf Theiss Budapest

Dispute resolution

CMS Nagy & Trócsányi Oppenheim Szecskay Attorneys at Law

DLA Piper Hungary Lakatos, Köves & Partners

Gárdos, Füredi, Mosonyi, Tomori Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Siegler Bird & Bird Ügyvédi Iroda Wolf Theiss Budapest

Employment

Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law

CMS DLA Piper Hungary Pál és Kozma Ügyvédi Iroda Szecskay Attorneys at Law VJT & Partners

CLV Partners Dentons Oppenheim Szabó Kelemen & Partners

Intellectual property

SBGK Attorneys at Law Szecskay Attorneys at Law

CMS Danubia Legal Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Oppenheim Sár & Partners Siegler Bird & Bird Ügyvédi Iroda

Life sciences

Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law

CMS Szecskay Attorneys at Law

Projects and energy

Andrékó Ferenczi Kinstellar Wolf Theiss Budapest

CMS DLA Piper Hungary Oppenheim

Budapest Law Firm No. 5000 Dentons Lakatos, Köves & Partners Szabó Kelemen & Partners

Real estate

CMS Dentons Lakatos, Köves & Partners

DLA Piper Hungary Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law

Andrékó Ferenczi Kinstellar CERHA HEMPEL Dezső & Partners Siegler Bird & Bird Ügyvédi Iroda Szécsényi and Partners

Tax

DLA Piper Hungary Jalsovszky

Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Vámosi-Nagy Ernst & Young Law Office

CMS Wolf Theiss Budapest

TMT

CMS Dentons Lakatos, Köves & Partners

DLA Piper Hungary VJT & Partners

Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Siegler Bird & Bird Ügyvédi Iroda Szecskay Attorneys at Law

IFLR 10 0 0 2020 TIER 1

TIER 2

TIER 3

Banking and Finance

Andrékó Ferenczi Kinstellar CMS Dentons DLA Piper Hungary Siegler Bird & Bird Ügyvédi Iroda

Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Lakatos, Köves and Partners Lengyel Allen & Overy

Gárdos Füredi Mosonyi Tomori HP Legal I Hajdu & Partners Nagy & Trócsányi Oppenheim Partos & Noblet / Hogan Lovells Szecskay Attorneys at Law Vámosi-Nagy Ernst & Young Law Office Wolf Theiss Budapest

Corporate and M&A

CMS Dentons DLA Piper Hungary Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Siegler Bird & Bird Ügyvédi Iroda

Andrékó Ferenczi Kinstellar Lakatos, Köves and Partners Szecskay Attorneys at Law

Jeantet-d'Ornano Lengyel Allen & Overy Nagy & Trócsányi Oppenheim

Project development

Andrékó Ferenczi Kinstellar CMS Dentons Wolf Theiss Budapest

Budapest Law Firm No. 5000 DLA Piper Hungary Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Lakatos, Köves and Partners Oppenheim Siegler Bird & Bird Ügyvédi Iroda

Lengyel Allen & Overy Siegler Bird & Bird Ügyvédi Iroda

Andrékó Ferenczi Kinstellar Dentons DLA Piper Hungary Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Lakatos, Köves and Partners

Capital markets

3

www.bbj.hu

Budapest Business Journal | June 5 – June 18, 2020

Special Report | 21

LEGAL 500 2020 LEGAL ACTIVITIES

TIER 1

TIER 2

TIER 3

Banking, finance and capital markets

Andrékó Ferenczi Kinstellar CMS Dentons DLA Piper Hungary Kapolyi Law Firm Lakatos, Köves and Partners Lengyel Allen & Overy Siegler Bird & Bird Ügyvédi Iroda

CERHA HEMPEL Dezső & Partners Gárdos, Füredi, Mosonyi, Tomori HBK Partneres Attorneys at Law Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Noerr Schoenherr Hetényi Attorneys at Law Szecskay Attorneys at Law Wolf Theiss Budapest

Deloitte Legal Göndöcz and Partners Law Firm Forgó, Damjanovic & Partners HP Legal | Hajdu & Partners Jalsovszky Nagy & Trócsányi Oppenheim Partos & Noblet / Hogan Lovells Szabó Kelemen & Partners Attorneys Vámosi-Nagy Ernst & Young Law Office

Competition

Andrékó Ferenczi Kinstellar CMS Dentons Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Lakatos, Köves and Partners Lengyel Allen & Overy Oppenheim

Bassola Law Firm CERHA HEMPEL Dezső & Partners DLA Piper Hungary Schoenherr Hetényi Attorneys at Law Szecskay Attorneys at Law

Forgó, Damjanovic & Partners KLART Szabó Legal Partos & Noblet / Hogan Lovells Réti, Várszegi and Partners PwC Legal Siegler Bird & Bird Ügyvédi Iroda Szabó Kelemen & Partners Attorneys VJT & Partners

Commercial, Corporate & M&A

Andrékó Ferenczi Kinstellar CMS Dentons DLA Piper Hungary Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Lakatos, Köves and Partners Oppenheim Siegler Bird & Bird Ügyvédi Iroda

Forgó, Damjanovic & Partners Lengyel Allen & Overy Schoenherr Hetényi Attorneys at Law Szecskay Attorneys at Law VJT & Partners Wolf Theiss Budapest

Deloitte Legal Göndöcz and Partners Law Firm Jalsovszky Kapolyi Law Firm Nagy & Trócsányi Partos & Noblet / Hogan Lovells Szabó Kelemen & Partners Attorneys

CMS

Andrékó Ferenczi Kinstellar Dentons Lakatos, Köves and Partners Siegler Bird & Bird Ügyvédi Iroda Taylor Wessing Hungary VJT & Partners

CERHA HEMPEL Dezső & Partners DLA Piper Hungary KPMG Legal Tóásó Law Firm Oppenheim Réti, Várszegi and Partners PwC Legal SBGK Attorneys at Law Schoenherr Hetényi Attorneys at Law Wolf Theiss Budapest

Dentons Forgó, Damjanovic & Partners Siegler Bird & Bird Ügyvédi Iroda Wolf Theiss Budapest

CERHA HEMPEL Dezső & Partners Gárdos, Füredi, Mosonyi, Tomori Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Lengyel Allen & Overy LFB – László Fekete Bagaméry Lohn Law Firm Partos & Noblet / Hogan Lovells Réti, Várszegi and Partners PwC Legal Sándor Szegedi Szent-Ivány Komáromi Eversheds Sutherland Szabó Kelemen & Partners Attorneys VJT & Partners

Employment

CMS Forgó, Damjanovic & Partners Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law VJT & Partners

Andrékó Ferenczi Kinstellar DLA Piper Hungary KCG Partners Law Firm Lakatos, Köves and Partners Szecskay Attorneys at Law Wolf Theiss Budapest

bnt | attorneys-at-law CLV Partners - Csabai & Partners Law Firm Kinga Zempléni Law Firm Noerr Oppenheim Sándor Szegedi Szent-Ivány Komáromi Eversheds Sutherland Schoenherr Hetényi Attorneys at Law Siegler Bird & Bird Ügyvédi Iroda Szabó Kelemen & Partners Attorneys Szécsényi and Partners TaylorWessing Hungary Vámosi-Nagy Ernst & Young Law Office

Intellectual property

Danubia Legal Oppenheim SBGK Attorneys at Law Siegler Bird & Bird Ügyvédi Iroda Szecskay Attorneys at Law

CMS Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Lakatos, Köves and Partners

Dentons DLA Piper Hungary Forgó, Damjanovic & Partners Schoenherr Hetényi Attorneys at Law

Projects and energy

Andrékó Ferenczi Kinstellar CMS Dentons DLA Piper Hungary Lakatos, Köves and Partners Siegler Bird & Bird Ügyvédi Iroda Wolf Theiss Budapest

CERHA HEMPEL Dezső & Partners Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Oppenheim Réti, Várszegi and Partners PwC Legal

Forgó, Damjanovic & Partners HP Legal | Hajdu & Partners KCG Partners Law Firm Schoenherr Hetényi Attorneys at Law Szabó Kelemen & Partners Attorneys Szecskay Attorneys at Law

CMS Dentons Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Lakatos, Köves and Partners

Andrékó Ferenczi Kinstellar DLA Piper Hungary Oppenheim Partos & Noblet / Hogan Lovells Siegler Bird & Bird Ügyvédi Iroda

CERHA HEMPEL Dezső & Partners Deloitte Legal Göndöcz and Partners Law Firm Jalsovszky Kapolyi Law Firm KCG Partners Law Firm Lohn Law Firm Noerr Szabó Kelemen & Partners Attorneys Szecskay Attorneys at Law Szécsényi and Partners Vámosi-Nagy Ernst & Young Law Office

Technology, Media, Telecommunications

CMS Lakatos, Köves and Partners

Andrékó Ferenczi Kinstellar Dentons DLA Piper Hungary Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Siegler Bird & Bird Ügyvédi Iroda VJT & Partners

Forgó, Damjanovic & Partners Lengyel Allen & Overy Partos & Noblet / Hogan Lovells Sándor Szegedi Szent-Ivány Komáromi Eversheds Sutherland Szecskay Attorneys at Law Wolf Theiss Budapest

Tax

CMS DLA Piper Hungary Hegymegi-Barakonyi and Partner Baker & McKenzie Attorneys-at-Law Jalsovszky Nagy & Trócsányi Vámosi-Nagy Ernst & Young Law Office

Deloitte Legal Göndöcz and Partners Law Firm KCG Partners Law Firm Lakatos, Köves and Partners LFB – László Fekete Bagaméry Réti, Várszegi & Partners PwC Legal Szecskay Attorneys at Law Wolf Theiss Budapest

Data privacy and data protection

Dispute resolution

Real estate & construction

CMS DLA Piper Hungary Lakatos, Köves and Partners Nagy & Trócsányi Oppenheim Szecskay Attorneys at Law

22 | 3

Special Report

www.bbj.hu

Budapest Business Journal | June 5 – June 18, 2020

Coronavirus Crisis Shines a Light on Labor Law The outbreak of the pandemic caused a headache not only for employers, but also for lawyers who had to be really creative when applying legislation that never envisaged such a crisis.

Following the first shockwave, the government introduced some changes to the labor law which helped somewhat ease the burden on employers.

ZSÓFIA VÉGH

One major driving principle was to help employers retain workforce without risking the existence of their business. The government opted for a method originating from German-speaking countries.

Kurzarbeit, or short-time work, is a form of employment where staff continue to work for the company but at reduced hours and pay, and where the government will make up some of the lost income.

In Hungary, the first local version of kurzarbeit, introduced in mid-April, laid out strict rules on who could actually enter the program. By the end of the month, at the suggestion of various business chambers and other market players, a new, modified version was rolled out which allowed for a significantly larger number of companies to make use of the subsidy.

To receive it, there has to be an agreement between an employer and its employee.

As for the actual period of time to be worked, the law says working time has to be

at least

25%

but not more than 85% of the employee’s previous hours. Within this range, any percentage of reduced working time can be determined.

The rate of the subsidy is 70% of the part of the base salary less the personal income tax and individual contribution applicable

In response to the pandemic, the authorities introduced new regulations governing kurzarbeit, short-time working. Photo by Alexander Limbach / Shutterstock.com on the day of the declaration of the state of emergency (March 11) in proportion to the lost working time. The maximum term of the subsidy is three months. The subsidy is paid directly to employees by the public employment service in arrears on a monthly basis.

Rule of Thumb

As a rule of thumb, any modification in employment had to be agreed upon by both the employers and the employee, but that was not always the case. Some companies unaware of how long the crisis would last and they could stay afloat laid off many of their workers, even though one-sided steps are not allowed by the law.

This was, however, more likely to take place at smaller companies that did not really have any backup, or in industries that came to a complete halt.

“This forced transition to home office has reassured employers who had been doubting the efficiency of this form of employment that they can trust their employees and the efficiency won’t be compromised.”

“If looking at PwC’s clients, my experience is that companies tried to and indeed did handle these situations well,” László Szűcs of Réti, Várszegi & Partners Law Firm PwC Legal told the Budapest Business Journal.

“These companies have an HR-department and so the preparations and communication to employees was

broad. Trade unions were also involved and everyone aimed to implement changes in a way that employees understand it,” he adds.

Yet companies where reserves were finite and whose orders disappeared entirely did not have safety margins to retain employees, the expert notes.

The pandemic has also shed light on the vulnerability of some other employment forms including temps or ad hoc engagement agreements.

Generally, these roles offer the least security and were the first ones employers terminated. In general, most parties were trying to work out a mutually beneficial solution (within limitations) but there were several examples where that was not the case, Szűcs says.

Another question that arises is how and to what extent employers can check the health of their employers returning to work. The regulations introduced during the state of emergency allow the employer to monitor the health of their employees to the extent necessary, but this right is not unlimited.

Positive Impact

Fortunately, the pandemic has had some positive impact on the labor market. For example, it has proven that working from home can be effective.

“This forced transition to home office has reassured employers who had been doubting the efficiency of this form of employment that they can trust their employees and the efficiency won’t be compromised,” Szűcs says.

With the easing of restrictions, employers are now faced with a new legal obligation concerning the return to work.

They cannot be obliged to

provide a

100%

virus-free environment, but they have to do their best to keep the risk of infections low.

To ensure, that the return to work is safe, the employer has a legal obligation to perform a risk assessment before the office/ site reorganization to take stock of the hazards associated with the operation and manage its effects, Szűcs says. Failure to do so could result in a fine.

László Szűcs Once the working conditions have been determined after the reorganization, the employer is obliged to inform and educate employees in writing about the new occupational safety conditions.

Employers are advised to place information and pictograms for occupational safety purposes at the place of work, and to conduct general and, if necessary, additional occupational safety training for each area of operation before work restarts.

3

www.bbj.hu

Budapest Business Journal | June 5 – June 18, 2020

Special Report | 23

Law firms with international affiliations Ranked by no. of attorneys (with license to practice) in Hungary on May 4, 2020 name of assoCiate non-hungaRian LaW fiRm oR CoopeRation netWoRk WoRLd hQ yeaR estabLished

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Data protection & cybersecurity, compliance & investigations, restructuring and insolvency, tech industries, state aid

CMS Cameron McKenna Nabarro Olswang LLP London 1779

75 1989

erika papp 1053 Budapest, Károlyi utca 12.

(1) 483-4800 budapest@cms-cmno.com

✓

Capital markets, data protection and privacy, film and media law, fintech, project finance, restructuring and insolvency

DLA Piper UK LLP London 2006

90+ 1988

andrás posztl 1124 Budapest, Csörsz utca 49–51.

(1) 510-1100 hungary@dlapiper.com

–

Freshfields Bruckhaus Deringer London 1743

29 1989

ulrike Rein 1053 Budapest, Károlyi utca 12.

(1) 486-2200 office@oppenheimlegal.com

Cms CameRon mCkenna nabaRRo oLsWang LLp magyaRoRszági fiókteLepe cms.law 1

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oppenheim Ügyvédi iRoda www.oppenheimlegal.com 3

42

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Lakatos, köves és táRsai Ügyvédi iRoda 37

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Clifford Chance LLP, Multilaw, Interlaw, Association of European Lawyers, Global Leaders Forum – –

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Infrastructure and project finance, joint ventures and private equity, capital markets, financial restructuring and insolvency, data protection

Dentons Europe LLP London 2013

✓

Advertising law and consumer protection, capital markets, data protection, restructuring and insolvency

WSG – World Services Group, TerraLex, Legalink, EuroJuris, SCG – State Capital Group, DORDA Best Friends Network, Biolegis, Lexicom, LEGUS, INBLF – –

✓

Capital markets, project finance, employment, international space and air law, healthcare

Bredin Prat Paris 1966

37 1993

zoltán sárhegyi, beatrix bártfai 1022 Budapest, Árvácska utca 6.

(1) 209-0180 titkarsag@sarhegyi.hu

✓

State aid, data protection, project financing, restructuring and insolvency

CERHA HEMPEL Rechtsanwälte GmbH Vienna 1921

7 1998

attila dezső, tamás polauf 1011 Budapest, Fő utca 14–18.

(1) 457-8040 office@cerhahempel.hu

✓

Data protection and technology, state aid and public utilities, trust, economic criminal law

PricewaterhouseCoopers Legal LLP London 2006

90 2000

zoltán várszegi 1055 Budapest, Bajcsy-Zsilinszky út 78.

(1) 461-9888 rvp.central@ hu.pwclegal.com

✓

–

Wolf Theiss Rechtsanwälte GmbH Vienna 1959

13 2007

zoltán faludi 1085 Budapest, Kálvin tér 12–13.

(1) 484-8800 budapest@wolftheiss.com

–

Corporate restructuring and insolvency, gaming and betting, IT, telecommunications and e-commerce

Andersen Global San Francisco 2013

167 1996

tamás szabó 1024 Budapest, Lövőház utca 39.

(1) 288-8200 tamas.szabo@sz-k-t.hu

✓

Compliance, risk & sensitive investigations, infrastructure & projects, NPLs & distressed assets, restructuring & insolvency, white-collar crime, aviation

Kinstellar – 2008

11 2000

kristóf ferenczi 1054 Budapest, Széchenyi rakpart 3.

(1) 428-4400 budapest@kinstellar.com

Baker & McKenzie LLP Chicago 1949

77 1987

zoltán hegymegi-barakonyi 1051 Budapest, Dorottya utca 6.

(1) 302-3330 budapest.reception@ bakermckenzie.com

AIPEX Munich 2010

dentons

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szeCskay attoRneys at LaW www.szecskay.com

34

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győRi és sáRhegyi Ügyvédi táRsuLás

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www.gyoriessarhegyi.hu

CeRha hempeL dezső és táRsai Ügyvédi iRoda 8

www.cerhahempel.com/hu/offices/ magyarorszag

9

Réti, váRszegi és táRsai Ügyvédi iRoda pwC LegaL

32

31

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www.retivarszegipartners.hu

WoLf theiss faLudi eRős Ügyvédi iRoda 10

www.wolftheiss.com

szabó, keLemen és táRsai 11 andeRsen Ügyvédi iRoda

28

27

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www.sz-k-t.hu

andRékó feRenCzi 12 kinsteLLaR Ügyvédi iRoda

26

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www.kinstellar.com

hegymegi-baRakonyi és táRsa bakeR & mCkenzie Ügyvédi iRoda 13

www.bakermckenzie.com/en/ locations/emea/hungary

top LoCaL exeCutive phone emaiL

Restructuring & insolvency, data protection & GDPR, aviation, investment protection, regulatory, compliance and investigations, consumer protection

www.lakatoskoves.hu 4

otheR

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no. of tRainees in hungaRy on may 4, 2020

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Rank

LegaL speCiaLity aReas

no. of offiCes WoRLdWide yeaR hungaRian offiCe estabLished

Budapest Business Journal | June 5 – June 18, 2020

name of assoCiate non-hungaRian LaW fiRm oR CoopeRation netWoRk WoRLd hQ yeaR estabLished

24 | 3

24

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Data protection, cyber law, consumer protection, corporate compliance, capital markets, financial regulatory, project finance, restructuring, insolvency

24

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Data protection

A

1991

180+ 2015(1)

A

1992

péter Lakatos 1075 Budapest, Madách Imre út 14.

(1) 429-1300 mail@lakatoskoves.hu

istván Réczicza 1061 Budapest, Andrássy út 11.

(1) 488-5200 budapest@dentons.com

andrás szecskay 1055 Budapest, Kossuth Lajos tér 16–17.

(1) 472-3000 info@szecskay.com

sbgk Ügyvédi iRoda www.sbgk.hu 13

A

1969

katalin szamosi 1062 Budapest, Andrássy út 113.

(1) 461-1000 mailbox@sbgk.hu

3

www.bbj.hu

Budapest Business Journal | June 5 – June 18, 2020

10

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Data protection, sports

Bird & Bird LLP London 1846

30 2008

peter knight, david dederick 1027 Budapest, Kapás utca 6–12.

(1) 301-8900 budapest@twobirds.com

Noerr LLP Munich 1950

16 1990

zoltán nádasdy, Jörg k. menzer 1011 Budapest, Fő utca 14–18.

(1) 224-0900 recepcio@noerr.com

otheR

top LoCaL exeCutive phone emaiL

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no. of paRtneRs of hungaRian offiCe on may 4, 2020 6

no. of offiCes WoRLdWide yeaR hungaRian offiCe estabLished

23

name of assoCiate non-hungaRian LaW fiRm oR CoopeRation netWoRk WoRLd hQ yeaR estabLished

siegLeR biRd & biRd 14 Ügyvédi iRoda

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Rank

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www.twobirds.com

noerr

21

4

5

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Litigation, arbitration & ADR, data protection/GDPR, healthcare, insurance & reinsurance, state aid, restructuring & insolvency

20

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Lex Mundi / Yingke International Houston, USA / China 1989/2001

600 / 66 1991

péter berethalmi 1126 Budapest, Ugocsa utca 4/B (1) 487-8700 budapest_office@nt.hu

18

11

2

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Public policy, privacy

Lexing Paris 1978

30 2011

miklós orbán 1036 Budapest, Perc utca 6.

(1) 769-1163 office@opl.hu

✓

Compliance, white collar crime, regulatory, data protection, insolvency and restructuring

Schönherr Rechtsanwálte GmbH Vienna 1950

15 2008

kinga hetényi 1133 Budapest, Váci út 76.

(1) 870-0700 office.hungary@ schoenherr.eu

–

Data protection

Ernst & Young Law GmbH Stuttgart Germany 2002

More than 80 2010

iván sefer 1132 Budapest, Váci út 20.

(1) 451-8100 law@hu.ey.com

✓

Immigration, data protection, regulatory compliance, administrative law

Eversheds Sutherland London (UK), Atlanta (US) 1988 (UK), 1924 (US)

69 1987/1999

ágnes szent-ivány 1026 Budapest, Pasaréti út 59.

(1) 394-3121 office@ eversheds-sutherland.hu

153 2009

attila kövesdy 1068 Budapest, Dózsa György út 84/C (1) 428-6800 cehudeloitteinhungary@ deloittece.com

91 2005

pál Jalsovszky 1124 Budapest, Csörsz utca 41.

(1) 889-2800 office@jalsovszky.com

www.noerr.com 15

nagy & tRóCsányi Ügyvédi iRoda 16

www.nt.hu

oRbán & peRLaki

17 Ügyvédi táRsuLás www.opl.hu

Special Report | 25

sChönheRR hetényi Ügyvédi iRoda

www.schoenherr.eu/hungary/office/ 18

17

vámosi-nagy eRnst & 18 young Ügyvédi iRoda

17

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3

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www.eylaw.hu

sándoR szegedi szent-ivány komáRomi eveRsheds sutheRLand 19

www.eversheds-sutherland.hu

deLoitte LegaL göndöCz és táRsai 20 Ügyvédi iRoda

15

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14

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Tax litigation, data privacy, legal and financial protection of private wealth

14

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4

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International Lawyers Network Westwood, USA 1988

✓

Data processing & privacy, ccompliance, pharma, insolvency and resutructuring

bnt – –

12 2003

éva Ratatics, Rainer tom 1143 Budapest, Stefánia út 101–103.

(1) 413-3400 info.hu@bnt.eu

–

Bankruptcy, telecommunication, sports

Norton Rose Fulbright LLP London 1794

More than 50 1989

gergely stanka 1013 Budapest, Pauler utca 11.

(1) 354-4300 office@bpss.hu

–

bpv LEGAL, bpv HÜGEL, bpv BRAUN PARTNERS, bpv GRIGORESCU & STEFANICA Vienna, Brussels, Prague, Bratislava, Bucharest 2007

8 2000

andrea Jádi németh 1051 Budapest, Szent István tér 11.

(1) 429-4000 budapest@bpv-jadi.com

www.deloittelegal.hu

Deloitte Legal A A

JaLsovszky

www.jalsovszky.com

20

bnt Ügyvédi iRoda

21 www.bnt.eu

13

3

7

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bpss Ügyvédi iRoda www.bpss.hu

13

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bpv Jádi németh Ügyvédi iRoda www.bpv-jadi.com

21

13

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2

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Special Report

www.bbj.hu

sáRközy RödL & paRtneR Ügyvédi iRoda, RödL & paRtneR Ügyvédi táRsuLás

21 www.roedl.de

bán, s. szabó & paRtneRs 22 Ügyvédi iRoda

13

1

2

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otheR

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no. of tRainees in hungaRy on may 4, 2020

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Rank

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Compliance, data protection, IT, greenfield investments, corporate acquisition

Rödl & Partner GbR Wirtschaftsprüfer, Steuerberater, Rechtsanwälte Nuremberg 1977

kapoLyi LaW fiRm www.kapolyi.com

paRtos & nobLet in Co-opeRation With 22 hogan LoveLLs inteRnationaL LLp

90 1997

Chrysta bán, péter s. szabó 1051 Budapest, József nádor tér 5–6.

(1) 266-3522 office@bansszabo.hu

1

7

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–

Capiital markets

European Law Firm Eindhoven, the Netherlands 1989

27 1998

József kapolyi 1051 Budapest, József nádor tér 5–6.

(1) 267-3975 info@kapolyi.com

Capital markets, data protection, compliance

Hogan Lovells International LLP London, Washington Legacy Lovells: 1899 / Legacy Hogan & Hartson: 1904

51 2006

László partos Jnr. 1051 Budapest, Vörösmarty tér 7–8.

(1) 505-4480 office@hoganlovellls.co.hu

–

Insurance law

ADVOC London 1990

94 1992

erika tomori 1056 Budapest, Váci utca 81.

(1) 327-7560 postmaster@gmtlegal.hu

–

Real estate investment, VAT advisory, tax representation services, inheritance law, automated and intelligent mobility

CEE Attorneys Prague 2015

13 1992

alice dessewffy 1125 Budapest, Lóránt út 1/B (1) 413-3340 budapest@ ceeattorneys.com

Ally Law London 1990

70 2014

eszter kamocsay-berta 1054 Budapest, Széchenyi rakpart 8.

(1) 301-3130 reception@kcgpartners.com

12

6

3

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www.gmtlegal.hu

desseWffy & dávid vaLamint táRsaik Cee attoRneys Ügyvédi iRoda

24 www.ceeattorneys.com

109 1992

sándor sárközy, stefan sieferer 1062 Budapest, Andrássy út 121.

(1) 814-9880 budapest@roedl.com

12

www.hoganlovells.com

gáRdos mosonyi tomoRi 23 Ügyvédi iRoda

top LoCaL exeCutive phone emaiL

IBLC (International Business Law Consortium) Salzburg 1998

www.bansszabo.hu

22

no. of offiCes WoRLdWide yeaR hungaRian offiCe estabLished

Budapest Business Journal | June 5 – June 18, 2020

name of assoCiate non-hungaRian LaW fiRm oR CoopeRation netWoRk WoRLd hQ yeaR estabLished

26 | 3

10

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kCg paRtneRs Ügyvédi táRsuLás www.kcgpartners.com 24

10

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4

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Projects, construction, wealth management, data protection

10

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4

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Hotels&leisure, solar projects, industrial property, zoning, data protection, sports and arbitration

World Link for Law Zurich 1989

80 2008

balázs Lohn 1053 Budapest, Károlyi utca 12.

(1) 999-1233 info@lohn.hu

–

–

PONTES: The CEE lawyers – –

8 2005

Csaba polgár 1011 Budapest, Szilágyi Dezső tér 1.

(1) 799-8330 admin@hunlaw.hu

LUTHER Rechtsanwaltsgesellschaft mbH Cologne 1992

20 2014

attila fest 1054 Budapest, Báthory utca 8. 1/6 (1) 791-7060 office@festandpartner.hu

Conybeare Solicitors, Gowling WLG, Berwin Leighton Paisner London 1997/2016/2001

1/18/14 2008

László hajdu 1013 Budapest, Pauler utca 11.

(1) 799-8230 office@hplegal.eu

Lohn Ügyvédi iRoda www.lohn.hu

24

pontes budapest Ügyvédi iRoda www.ponteslegal.eu

10

24

4

3

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fest és táRsa Ügyvédi iRoda

www.festandpartner.hu 25

hp LegaL |

25 haJdu & paRtneRs | LaW fiRm www.hplegal.eu

9

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Aviation law, data protection, compliance, consumer protection

9

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act legal | bán & kaRika

26 Ügyvédi táRsuLás www.actlegal-bk.com

8

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2

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16 2010

gergely bán, márton karika 1117 Budapest, Alíz utca 1. building A, floor 5 (1) 501-5360 budapest@actlegal-bk.com

International Advisory Experts Durham, UK 2015

900 2015

Loránd barkassy-grünfeld 1126 Budapest, Tartsay Vilmos utca 14.

(1) 210-0768 office@ barkassygrunfeld.com

25 2007

kornelia nagy-koppany 1011 Budapest, Hunyadi János út 20.

(1) 302-9050 knplaw@knplaw.com

name of assoCiate non-hungaRian LaW fiRm oR CoopeRation netWoRk WoRLd hQ yeaR estabLished

top LoCaL exeCutive phone emaiL

–

Data protection and GDPR, compliance

act legal Germany 2017

baRkassy gRÜnfeLd Ügyvédi iRoda

8

–

2

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Construction law, immigration law, sport law, data protection law, insolvency law

8

5

4

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Pharmaceutical law, data protection and privacy, cyber security

Conference Bleue London 1996

✓

–

The Harmonie Group Minneapolis, USA 1993

77 2000

zoltán forgó, gábor damjanovic 1123 Budapest, Alkotás utca 17–19.

(1) 214-0080 office@fdlaw.hu

✓

International capital markets, regulatory

Allen & Overy LLP London 1930

42 1993

zoltán Lengyel 1075 Budapest, Madách Imre út 13–14.

(1) 483-2200 marketing_budapest@ allenovery.com

www.barkassygrunfeld.com 26

otheR

Life sCienCes

pubLiC pRoCuRement

inteLLeCtuaL pRopeRty

dispute ResoLution

CoRpoRate / m&a

enviRonment pRoteCtion

tmC

empLoyment

eu

Competition

eneRgy

banking and finanCe

tax

ReaL estate

CommeRCiaL

no. of paRtneRs of hungaRian offiCe on may 4, 2020

no. of tRainees in hungaRy on may 4, 2020

Company Website

no. of attoRneys With LiCense to pRaCtiCe in hungaRy on may 4, 2020

Rank

LegaL speCiaLity aReas

Special Report | 27 no. of offiCes WoRLdWide yeaR hungaRian offiCe estabLished

3

www.bbj.hu

Budapest Business Journal | June 5 – June 18, 2020

knp LaW nagy-koppany and LenCs LaW offiCe www.knplaw.com 26

foRgó, damJanoviC és 27 táRsai Ügyvédi iRoda

7

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www.fdlaw.hu

LengyeL aLLen & oveRy 27 Ügyvédi iRoda

7

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1

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www.allenovery.com

danubia LegaL www.danubia.hu

6

28

4

5

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EPLAW A A

A

1998

Judit Lantos, eszter szakács 1051 Budapest, Bajcsy-Zsilinszky út 16.

(1) 411-8875 office@danubialegal.hu

bihaRy, baLassa Ügyvédi iRoda www.biharybalassa.hu

29

CLv paRtneRs, Csabai és

29 táRsai Ügyvédi iRoda www.clvpartners.com

kLaRt LegaL 30 Ügyvédi táRsuLás

5

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–

GDPR

TELFA (Trans European Law Firms Alliance) Brussels 1898

✓

Data protection

Ius Laboris Global HR Lawyers Brussels 2001

–

Data protection

www.klartlegal.hu

peteRka & paRtneRs iRoda

30 www.peterkapartners.com/en/local/ budapest/

saLLó Ügyvédi iRoda– paRtneR studio 30 LegaLe de Capoa

4

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www.squarra.hu

notes: (1) Dentons (formely Salans) has been present in Hungary since 2006.

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A A

61 2003

marianna Csabai 1126 Budapest, Tartsay Vilmos utca 3.

(1) 488-7008 info@clvpartners.com

A

2014

Levente antal szabó 1011 Budapest, Corvin tér 10.

(1) 796-3600 info@klartlegal.eu

Data protection

Peterka & Partners advokátní kancelář s.r.o.

Prague 2000

9 2013

andrás Csehó 1051 Budapest, Vörösmarty tér 4.

(1) 235-1090 office@peterkapartners.hu

–

–

Studio Legale de Capoa e Associati Bologna, Italy 1986

8 2000

krisztina salló 1055 Budapest, Honvéd utca 38. 4/7.

(1) 331-0311 sallo.decapoa@gmail.com

–

IT law and e-commerce, bankruptcy and insolvence law, debt management, construction law, gambling law

Warwick Legal International Network, Asean Legal Alliance Canterbury, UK / Singapore 2001 / A

54 / 10 1997

thomas a. squarra 1016 Budapest, Avar utca 8.

(1) 474-2080 info@squarra.hu

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Budapest Business Journal | June 5 – June 18, 2020

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knows, we may try it. But, let’s be clear, this kind of gimmick won’t last and won’t fundamentally change the restaurant business,” he insists.

The Human Interface

Nourishing Mind and Spirit: The Future of Budapest’s Restaurants David Holzer finds his mind, not to mention his stomach, pining for the forbidden fruits of a Budapest restaurant, and wondering what the hospitality scene in the capital will look like post-pandemic.

“By spring 2021, we should then have a tourism and restaurant business that’s workable, profitable and hopefully sustainable for those that remain in the market. But, even if the government is as efficient as it can be, I expect that at least 20% of the market will disappear.”

DAVID HOLZER

For these past couple of months of lockdown and restrictions, I’ve been dreaming of the Pierrot restaurant in old Buda.

It is part of the Zsidai Group which, in Budapest alone, owns 21 Hungarian Kitchen, the Pest-Buda Bistro, Baltazár, ÉS Bisztró and Deli, the Spíler chain and the Jamie Oliver franchise. Hundreds of thousands of guests eat at the group’s restaurants and bars every year.

I’d assumed that, like other upmarket Budapest restaurants, the Pierrot would be offering home delivery. When I discovered it wasn’t, I was curious as to why.

“Home delivery is the arch enemy of the full-service restaurant business,” Roy Zsidai, CEO of Zsidai Group told me.

“It’s a global trend that, along with the growth of convenience food, was eating into the business way before the pandemic.

We looked at it but realized it’s no way to make money. Restaurants with high standards like ours can’t do home delivery sustainably.”

Apart from the financial side of things, there’s a more philosophical reason why Zsidai Group doesn’t do home delivery as a business.

“Home delivery purely provides nutrition for the body. Full-service restaurants like ours also nourish the mind and spirit,” Zsidai says.

Visiting a Zsidai Group restaurant, “is a multi-dimensional experience. We consider everything from where the tables are placed to the cutlery you use; every little detail your senses experience. You can’t deliver that at home. Which is why you go out to a restaurant like Pierrot.”

Considerations

Is home delivery out of the question for Zsidai Group?

“We’ve considered ways of doing it,” Zsidai admits. “We’ve thought about

“It’s the global trends I spoke about earlier that will affect us. Technology and automation create opportunities but also eat into the full-service restaurant business by making delivery and fast food cheaper: There will be increasingly less of a human interface in these segments and food technology will become ever more sophisticated. Robots that can create simple pizzas and burgers already exist.

The pandemic and its aftermath have certainly given the industry more of an incentive to consider automation. It’s a question of how fast the technology can be rolled out.”

Roy Zsidai delivering semi-prepared food you can finish at home, perhaps following video instructions from one of our master chefs.

It’s possible to deliver some pretty amazing food this way. I often bring home halfprepared food from my restaurants. I need very little time to prepare a meal compared to starting from scratch. If I’m hosting my friends, I can chat. I don’t have to spend hours in the kitchen,” he explains.

“But this kind of home delivery won’t ever be cheap because of the ingredients and the fact that it’s partially prepared by a chef. You’ll also have to put in some work. I don’t believe it’s a mass solution for people just wanting a pizza or burger in 30 minutes. And, in any case, it’s not something we’re considering offering right now.”

Where does that leave Zsidai Group, obviously facing tough times? “We’ll survive. We have reserves. We’ve made calculations depending on various

scenarios and have a pretty good idea of how much money we’ll need to put into the business to stay alive in the next year or so.

“Rigorous, strict economic and business discipline – as well as passion for the business and great respect for everyone we work with – has enabled us to weather previous economic crises in 1989, 1998 and 2008. Ours is a family business that has survived a lot of hits, literally. During World War II, my grandfather’s tank was bombed in front of Pierrot back when it was a bakery and he’d just gone in to buy bread.”

Some restaurants and bars are taking creative steps to make their places look fuller, like putting mannequins at tables.

One restaurant in Vilnius, Lithuania, is using mannequins to showcase creations by local designers. Was Zsidai open to something like that?

“It’s a funny idea. And the idea of a tie-in with designers is good. Who

What, then, does Zsidai think is the immediate future of the Budapest restaurant business? “Restaurants like ours, in central Budapest locations, are around 80% dependent on tourists, business people, corporate events and visitors from outside the city. Before the crisis, the market was pretty much oversupplied in all these segments. Now, demand is minimal,” Zsidai says.

“We’re hoping that restrictions will be lifted by mid-June, allowing free travel within the whole of Europe. This is necessary to not further devastate our economy. If restrictions are lifted, things could pick up in August and September.

We then need to find ways of containing a potential second wave in the fall and winter, so this doesn’t kill international travel and the economy entirely.”

Given a good wind, that will see the hospitality world into next year. “By spring 2021, we should then have a tourism and restaurant business that’s workable, profitable and hopefully sustainable for those that remain in the market. But, even if the government is as efficient as it can be, I expect that at least 20% of the market will disappear. Without being too fairytale about it, I hope the good restaurants are the ones that survive. We’ll be doing everything we already do: entertaining and spoiling our guests.”

At that, I thought of Gyuszi, our waiter both times we visited Pierrot.

The way he treated us was every bit as much of why we loved the restaurant as the food and the ambience.

I asked Zsidai to pass on my best wishes to Gyuszi and the message that we’re looking forward to seeing him again in the not too distant future.

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Budapest Business Journal | June 5 – June 18, 2020

Szekszárd: Sexier Than Ever Southern, sunkissed Szekszárd is famous for its great value red wines but in recent years it has become much more than a cheap and cheerful (if less polished) alternative to the previously more coveted Villány region, further to the south. Szekszárd’s winemakers have confidently set sail on their own course with increasingly sophisticated and complex reds.

ROBERT SMYTH

Long loved by consumers for their excellent value for money, Szekszárd’s vintners are now also succeeding in making more varietally-pure Kékfrankos and Kadarka, which also play a key role in the region’s flagship Bikavér blend.

Critics have often dismissed Szekszárd as solely a source of simple, uniformly fruity wines due to the loess soils that dominate the region, but the truth is that truly lovely vintages can come from loess; indeed, elsewhere loess, which accounts for up to 10% of the planet’s topsoil, is strongly associated with quality wine.

Places where loess is loved and not loathed include Wagram and parts of Wachau and Kremstal in Austria (where it is prized for its ability to make fuller Grüner Veltliner), many top German vineyards; and even across the Atlantic in eastern Washington. Indeed, some of Tokaj’s most elegant wine comes from loess-dominated vineyards.

Szekszárd is in any case about more than loess, since there are other soil and rock types lurking under and alongside it, with lots of iron-rich red clay and chunks of limestone in the mix (the latter providing acidity to counterbalance the region’s ripeness).

The clay, which is also known as terra rossa, is clearly visible and regularly pokes through the surface as you drive around this undulating region. The terra rossa of Australia’s Coonawarra region, for example, is prized for the rich and structured red wines that it yields.

As you approach Szekszárd from Budapest, the Transdanubian hills

The Szekszárd Wine Region

Budapest

spread out before you and announce the end of the Great Plain; in these hills there are lots of intriguing nooks and crannies that are home to a patchwork of vineyards with various exposures and their own distinctive mesoclimates.

Add in the varying composition of the soils and Szekszárd isn’t simple or uniform at all. These individual vineyards are coming increasingly snapping into focus with wineries like Heimann, Sebestyén and Takler bringing out exciting single-vineyard wines that ooze their place of growth.

Savvy Szekszárdian

Savvy Szekszárdian vintners are focusing on a three-pronged approach of single varietal Kadarka (including exploring different clones) and Kékfrankos, and the Bikavér blend, which come in their own Burgundy-style bottles. The way the word Szekszárd is embossed under the neck of the bottle, a la Châteauneuf-du-Pape, is a nice reference to the spice of the Rhône, which is also a feature of Szekszárd reds.

Szekszárd is the Hungarian epicenter of Kadarka, the same grape as Bulgaria’s Gamza, and it is believed to have been brought to Hungary from the Balkans

by Serbs fleeing Ottoman invaders. For so long its wine has all too often either been watery and insipid, or overdone and covered in an oaky, overripe and tannic cloak and trying to be something it’s not.

Now, plenty of Kadarka wines with light tannins and playful acidity are coming through, exuding a distinctive rose hip note and delicious spiciness. This is a fragile and tricky grape to cultivate and prone to uneven ripening, while this thinskinned grape (hence the light tannins) is also a late-ripener, and susceptible to rot.

The Heimann winery recently launched a new brand called Heimann és fiai (sons), which Zoltán Heimann Jr. sees as an opportunity to develop stylistically with the Kadarka and Kékfrankos grape varieties.

Three of the four Kékfrankos hail from a single vineyard and really capture the nuances of the different terroirs. Meanwhile, the new range also features two Kadarkas: one that is a blend across a number of vineyards and simply called Szekszárd; and one which is from a single vineyard, the Porkoláb-völgy (völgy means valley).

This latter wine is made from the three most promising of the five new clones in the Porkoláb vineyard, which

were developed in tandem with the Pécs Research Institute. Altogether, the Heimann winery has eight clones of Kadarka now planted in its vineyards.

The Heimann és fiai Szekszárd Kadarka 2018 (HUF 3,290 from Bortársaság) is raspberry colored with pale intensity and aromas of the same fruit, as well as rosehip and red pepper. It’s light and airy on the palate with feather-light tannins and a spicy twist on the finish. It is the ideal summer red wine; very tasty yet also quite complex.

Complex Aromas

The Porkoláb-völgy Kadarka 2018 (HUF 5,650 from Bortársaság) is more floral and has more red pepper, with complex aromas of anise, lace and red berries, and with more weight. Both nicely capture the essence of the variety.

Bikavér is based on a Kékfrankos backbone and is fleshed out with international varieties, especially the Bordeaux grapes, that play an important role

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without stealing the locals’ limelight. The finishing touch is the spice and aromatics added by a few percent of Kadarka.

Any more and Kadarka’s pronounced aromas can start to take over, something not desired in a wine in which the aim is that no grape dominates.

In 2017, Sebestyén (a family winery run by the brother and sister team of Csaba and Csilla, who blend sophisticated wines with a strong sense of place), released three Bikavérs from that year’s vintage: one a generic Szekszárd, and two single vineyards from the Görögszó and Iván-völgy vineyards (both HUF 6,600 from Bortársaság).

As you approach Szekszárd from Budapest, the Transdanubian hills spread out before you and announce the end of the Great Plain; in these hills there are lots of intriguing nooks and crannies that are home to a patchwork of vineyards with various exposures and their own distinctive mesoclimates.

Szekszárd and Eger lock horns over which region was first to coin the term Bikavér (the English name of Bull’s Blood is less used these days due its not entirely former association with the bottom shelf of supermarkets).

While the northern Hungarian region of Eger battles with different levels of quality, Szekszárd tends to a higher end wine and always includes some Kadarka.

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Budapest Business Journal | June 5 – June 18, 2020

30 YEARS OF FREEDOM

Soviet tanks leaving Hungary, 1990. Photo by RIA Novosti archive, image #825492 / Miroslav Luzetsky / CC-BY-SA 3.0, CC BY-SA 3.0

The end of the ‘Temporary Stationing’ of Soviet Troops In Hungary The army of the Soviet Union entered Hungarian territory on September 23, 1944 with a claim it was to liberate the country from German occupation. Instead, an operation that was supposedly temporary would only come to an end more than 46 years later.

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The arrival of the Red Army in Hungary in the final phase of World War II was overshadowed by massive destruction and mass rape. After the war was over, Hungary was assigned by the Great Powers to Russia’s sphere of influence.

Accordingly, the presence of Soviet troops was legitimized by the Peace Treaty of Paris of 1947 as it was meant to ensure a smooth supply connection with the invaded Austrian territories.

Keeping two or three divisions, some 20,000-30,000 soldiers, would have sufficed to get the job done; still, some

50,000 men

remained.

The Austrian Independence Treaty signed by the Allied occupying powers (France, the United Kingdom, the United States and the USSR) on May 15, 1955 obliged Soviet troops to leave not only Austrian, but also Hungarian territory. That’s not what happened, though.

An addendum to the Warsaw Pact, which was signed one day earlier, established legal ground for the invasion to continue. Furthermore, a special corps was set up from those units that were withdrawn from Austria which, by the summer of 1956, prepared a blueprint for a military operation should it come to an anti-regime revolt.

The legitimacy of the Soviets’ stay at the “invitation” of the host nation was terminated on November 1, 1956 when Prime Minister Imre Nagy declared Hungary’s neutrality.

But the Soviet intervention in

A Bumpy Road to Settlement Bearing costs turned out to be a major issue during the negotiations over the terms of the withdrawal. Whilst the USSR claimed it had made investments worth some HUF 54 billion, according to the Hungarian estimate damages of up to HUF 88 bln were caused during the invasion. Most of this was environmental pollution, but the property damage was also enormous due to neglected maintenance. At some point, the Russians even threatened to suspend the withdrawal unless the Hungarian government paid up.

The parties decided to offset their claims at last which seemingly left the uninvited guests better off.

But it wasn’t until the end of 1992 that the actual settlement was finalized and signed. What is more, Hungary committed to provide the Russian military with medical supplies worth USD 10 million, and steps were taken to support the housing of migrating soldiers.

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Budapest Business Journal | June 5 – June 18, 2020

Good Old Days The withdrawal inspired the local music scene as well, with legendary rock band, Beatrice landing an epic hit called “Azok a boldog szép napok” (“Those good old days”). The song performed by lead singer Feró Nagy is still popular with crowds, with lyrics that declare: “Those good old days, goodbye now / But you just don’t know how great it feels without you / The most beautiful moment is when we say goodbye / And you get on the train / With tears in my eyes I can’t stop thinking about / Don’t you dare to miss it.”

the events of the 1956 revolution gave another opportunity to bring yet more soldiers onto Hungarian soil.

Beefed-up

Their beefed-up presence was given legal framework by a treaty between Hungary and the Soviet Union on May 27, 1957 that famously said that the Russian troops were stationed here “on a temporary basis.”

There was no talk over how many soldiers were going to be deployed in this fashion, nor for how long, nor was it laid down who would bear the related costs.

Troops were deployed all over the country. Up to 65,000 soldiers were based in

100

garrisons

and at 10 air bases. Close to 6,000 buildings were in use. Maintaining such military presence came at a cost, though, the burden of which was starting to become unbearable for the Soviet state budget by the end of the 1980s.

The arms race against the United States was bringing Moscow to its knees, and the Soviet adventure in Afghanistan also took a massive toll, both economically and from the military perspective. So, Soviet leader Mikhail Gorbachev had not much of a choice but to say goodbye to the so-called Brezhnev doctrine that threatened any attempt to leave the Soviet bloc with a military strike. Against this backdrop, Gorbachev’s announcement in the United Nations on December 7, 1988, where he committed to withdraw half a million troops from Eastern Europe, was not that surprising.

Gorbachev’s speech gave the first substantial push towards the actual process of withdrawal. However, the ruling Hungarian Socialist Workers’ Party (MSZMP) had only a partial version in mind at first, and talks in Moscow in March 1989 paved the way for the initial phase of at least that half-hearted solution. Then Hungarian Premier Miklós Németh claims to have brokered a secret deal with Gorbachev about the full withdrawal, clandestine nature of which was intended not to undermine the Soviets’ negotiating position with the Americans, although there is no evidence of such a deal. In fact, it wasn’t until mid-October 1989 when the idea of full withdrawal officially popped up in Moscow for the very first time.

From this point on, things started to gather momentum. The March 15, 1989 demonstration witnessed a speech by

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“A-list” actor György Cserhalmi, who read aloud the 12 points of the opposition forces, including the demand that the Soviet troops should leave immediately.

April 25 saw the first soldiers on their way home. Under the promised concept of partial withdrawal, more than 10,000 men had left by the end of May 1989, and by the end of the year the number had surpassed the 12,000 mark.

Nuclear Retreat

Perhaps just as important was the fact that by October 1989, all Russian nuclear warheads had also been moved back to the USSR. The fact that such weapons were on Hungarian soil at all, and had been since 1963, might well have come as a surprise to much of the Hungarian public, as the presence of the nuclear arsenal was a closely guarded secret.

A special storage facility existed for them in the Nagyvázsony-Tótvázsony area, about 15 km north of Lake Balaton.

The weaponary included air-to-surface atomic bombs and nuclear warheads meant for operations on land. Their power was equivalent to hundreds of the bomb dropped on Hiroshima.

Youth liberal party Fidesz organized a protest at the Russian Embassy on

Upper left: Portrait of a two soldiers of the Red Army, circa 1945, taken in Budapest.

Photo by Oleg Golovnev / Shutterstock.com Upper right: Portrait of a Red Army lieutenant and his son, taken circa 1958 in Cegléd.

Photo by Oleg Golovnev / Shutterstock.com

June 15

to demand full removal of troops, and the day after Viktor Orbán expressed the same demand in his famous speech at the reburial of Imre Nagy. So the opposition kept pushing for total withdrawal, and did so with reason: a meeting between MSZMP general secretary Károly Grósz and Gorbachev affirmed, yet again, a partial pull back only, even at the end of July 1989.

As months passed by, the apparatchiki slowly switched into realpolitik mode.

The collapse of the regime looked more and more inevitable by the day, therefore, they decided to rather to take the lead on the matter.

As Gorbachev’s advisor, Georgy Shakhnazarov put it, the new Hungarian and Polish governments would demand full withdrawal anyway, and it would be better that the withdrawal could take place in dignity, and “we avoid being mocked by our enemies”. The fact that the military presence was designed to deter opposition had clearly become irrelevant by this time, he added.

Last Man Standing

The last nail in the coffin of Russian occupation was the Malta Summit between President George Bush and Mikhail Gorbachev on December 2-3, 1989. That’s when the cold war officially ended, and the Soviet Union finally let Eastern Europe go.

Ruszkik, Haza!

The 1956 revolution had at least two trademark phenomena: the flag with the hole in the middle (the Communist coat of arms was ripped out as an act of protest) and the chant of “Ruszkik, haza!”

(Russians, go home!). Both were banned after the suppression of the revolution, of course, and the chanting reemerged only during the heated demonstrations in the

Left: Studio portrait of a Red Army officer, tank mechanic, taken in Cegléd, circa 1950.

The Soviet forces had a tank regiment based in Cegléd, about 70 km southeast of Budapest.

The schedule for the Russian withdrawal from Hungary was agreed upon on January 9, 1990. Talks to define the details started soon after, on February 1, 1990 which laid the groundwork for the intergovernmental pact on the matter signed on March 10. Under that pact, the whole process had to be completed

by June 30, 1991, and it concerned all military personnel, Soviet civilians, weaponry, and military equipment.

Apart from the total of some 100,000 Soviet citizens, perhaps half of which were civilians, a massive amount of military equipment had to be moved.

The operation involved 27,000 military and motor vehicles, 230,000 tonnes of ammunition, 100,000 tonnes of fuel and an additional 230,000 tonnes of other military equipment. Some

35,000 railway

wagons were required to transport all that material to the Russian border where they

very final phase of the change of regime. However, one of the last times the slogan was chanted en masse by passionate Hungarians in public was on April 17, 1991. That day Hungary played the Soviet Union in a qualifier for Euro 1992, the UEFA European Football Championship, at what was then the Népstadion, the national (or People’s) stadium, a game attended by this writer as a youth of 15. Some 60,000 gathered to

had to be unpacked and reloaded onto Soviet cargo trains because of the different track gauge used.

The last train full of military personnel left Hungary on June 16 (ahead of schedule), while the very last Soviet soldier, commander Viktor Silov, crossed the border at 15:01 on June 19, wearing civilian clothes.

Thus, June 19, 1991 became a key date in Hungarian history: since Germany overthrew the regime of its former ally Miklós Horthy and occupied the country on March 19, 1944, this was the first day when no foreign soldier was stationed on Hungarian soil. To commemorate the occasion, June 19 was declared a “memorial day” of national remembrance (but not a public holiday) by Parliament a decade later in 2001, commemorating the execution of the martyrs of the 1956 Hungarian Revolution (on June 16, 1958), as well as the anniversary of the end of the Soviet occupation of Hungary.

cheer on the Hungarian national football team, keen to take revenge for the historic loss of 0-6 at the Mexico World Cup of 1986 and symbolically for 45 years of repression. Unfortunately for the script writers, the away team won 1-0, but it didn’t matter.

It was still a case of “Tovarishi – konyec” (It’s over, comrades), as a famous political billboard had declared at the first democratic elections one year earlier.

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